Best value stocks to buy in 2022
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On this page we explain what makes a value stock and discuss the top options available right now. Get to know the pros and cons of looking for value and find out where’s best to buy your first shares.
What are the top value stocks to buy?
Find our expert picks in the table below. We have scoured the markets to look for value opportunities and our research has thrown up these selections. Click the links to find up to date price information or keep reading to learn more about each company in detail.
|#||Stock symbol||Company name||Trade now|
|2||PG||The Procter & Gamble Company|
|3||LLOY||Lloyds Banking Group|
1. HP (NYSE: HP)
HP is a personal computer and printer manufacturer that used to be known as Hewlett Packard. In 2015, Hewlett Packard split its operations in two, with the enterprise wing becoming a separate company, and changed its name to HP.
The new company has done well out of its narrower focus, particularly over the last couple of years. The pandemic caused a spike in demand for home computing equipment – particularly laptops, which make up the majority of HP’s revenue – and doubled its share price between 2020 and 2021.
A sustained rise in people working from home and subsequent demand for hardware would be good news for HP. It’s likely that growth will be steadier than the big jump we saw in the aftermath of the pandemic, but when that’s combined with the company’s penchant for returning money to shareholders through dividends and share buybacks, it looks like it could be an excellent value play.
2. Procter & Gamble (NYSE: PG)
Procter & Gamble is an American company that sells consumer goods. It was formed all the way back in 1837 and now owns 60 leading brands that deliver more than $70bn in revenue every year.
Steady improvement for many years defines PG’s performance on the stock market. In the last couple, its growth has been even more pronounced: the share price is up 60% since early 2018, while annual revenue has increased along with it.
Although PG is a little more expensive compared to a normal value stock, it makes this list because it’s a well-established company with a large, reliable revenue stream. The stock has been growing consistently since a 2014 restructure and it has increased its dividend for 63 consecutive years.
3. Lloyds Banking Group (LON: LLOY)
Lloyds is a British bank and the largest financial institution in the UK. The group’s origins can be traced back hundreds of years, into the late 17th century, when the Bank of Scotland was first formed. Nowadays, the Bank of Scotland is just one of the high street banks that are part of the Lloyds group, which also includes Halifax and Scottish Widows.
Like most banks, Lloyds is trading a long way from its early-2000 highs. Low interest rates cut bank profit margins to the bone and that along with the recent pandemic have further hurt the share price, which fell to £30 in the aftermath of the coronavirus crash in March 2020.
However, Lloyds is starting to make money again from more consumer spending and from a booming house market. It has a healthy balance sheet and no longer has to put aside so much money to protect itself, as it did throughout the pandemic. Those factors, along with its progressive dividend policy, make Lloyds a great value opportunity even without a rise in interest rates.
4. ViacomCBS (NASDAQ: VIAC)
The mass media platform, ViacomCBS, is one of the biggest entertainment brands in America. It owns the Paramount film studio, CBS TV network, and a variety of other media platforms, such as Comedy Central and Nickelodeon.
The company is transitioning towards becoming a massive streaming platform rather than a traditional TV and film operation. That has provoked some skepticism and a rocky share price, a situation made even rockier when it was caught up in the collapse of a hedge fund that owned a significant amount of VIAC stock.
However, the move to streaming is a big reason to be positive about the company. It has a large audience already and a content library packed full of programming. Its stock is available very cheaply relative to its size – Netflix is currently ten times more expensive – and it offers a dividend yield of more than 2% to boot.
5. Verizon (NYSE: VZ)
Verizon is an American telecoms company founded in 1983. It’s the second largest wireless network company in the country with well over 100 million customers, and also second only to AT&T in terms of revenue.
The stock has traded relatively flat for many years. Margins are low in telecoms because there’s so much competition for customers and both AT&T and Verizon have been distracted by trying to seek out new business areas. 5G internet, however, promises to change that, and everyone is engaged in a race to be the new market leader.
Verizon’s tactic involves selling off non-core businesses like AOL and Yahoo to fund its 5G spending. It’s piling billions into building out the infrastructure required but still has managed to raise its dividend for 14 years in a row. It’s also available at a significant discount to competitors like T-Mobile, which makes it an excellent value stock to look at before 5G arrives.
Where to buy the best value shares
To get shares in any of these companies you need to find a reliable stock broker. The options below are all easy to get started with and you can set up an account in a few minutes via one of the links.
What is a value stock?
A company whose shares are available more cheaply than you would expect based on its performance. Often it’s a company that is trading at a lower price than other stocks in the same industry.
Value stocks are often defined by metrics such as ‘price to earnings (P/E) ratio’, which simply represents its share price compared to the strength of its financials.
Are value shares a good investment?
It depends on the quality of the company. Value investing has proven to be a successful strategy over many years but it relies on the ability to pick out good companies that are undervalued by the market. It’s also a long term approach and you should be prepared to hold onto the shares for a while.
This type of investing is different to choosing a few cheap or penny stocks in the hope that one of them hits big. It’s based on extensive research that can identify companies using fundamental financial metrics, such as those with a low P/E ratio.
If you’re prepared to put in the time to evaluate businesses then value stocks can prove to be very profitable. A good place to start looking for value opportunities is through the news, where you can find the latest annual reports, as well as any developments that might affect share prices in the short term.
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