For years, analysts and portfolio managers have anticipated the return of value stocks as the market has moved higher. And for years they have continued to underperform growth stocks. However, that appears to have changed in 2022, as almost every metric from valuations to earnings for the growth arena have started to roll over in a big way.
Value stocks are typically defined as shares of a company with solid fundamentals that are priced below those of its peers, based on analysis of price-to-earnings ratio, yield and other factors. When you combine all the positives for owning value now, and match that with steady income, the potential for solid total return is big. And after all the selling this year, many of these stocks are trading at their cheapest in years.
We screened the BofA Securities top value ideas looking for stocks that will hold up better than the overall market if the inflation-induced decline continues. We also looked for the top “strong buy” ideas that paid solid and dependable dividends. Five stocks hit our screen, and all look very timely now. While all are rated Buy at BofA Securities, it is important to remember that no single analyst report should be used as the sole basis for any buying or selling decision.
Citizens Financial
This top value stock in the financial sector is offering a very solid entry point. Citizens Financial Group Inc. (NYSE: CFG) operates approximately 2,700 ATMs and 1,000 branches in 11 states in the New England, Mid-Atlantic and Midwest regions, as well as through online, telephone and mobile banking services, and it maintains approximately 130 retail and commercial non-branch offices.
Citizens Financial operates in two segments. The Consumer Banking segment offers traditional banking products and services, including checking and savings accounts, home and education loans, credit cards, business loans, mortgage and home equity lending and unsecured product finance and personal loans, as well as wealth management and investment services to retail customers and small businesses. This segment also provides indirect auto finance for new and used vehicles through auto dealerships.
The Commercial Banking segment offers various financial products and solutions, such as loans and leasing, trade finance, deposit and treasury management, cash management, and foreign exchange and interest rate risk management solutions. It also provides loan syndications, corporate finance, merger and acquisition, and debt and equity capital markets capabilities.
Shareholders receive a 4.92% dividend. BofA Securities has a $44 target price on Citizens Financial stock, which is in line with the $44.03 consensus target. The shares closed on Wednesday at $34.17.
Exelon
This top utility stock makes good sense now for conservative investors. Exelon Corp. (NYSE: EXC) engages in the energy generation, delivery, and marketing businesses in the United States and Canada. It owns nuclear, fossil, wind, hydroelectric, biomass and solar generating facilities.
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