The S&P 500 has more than tripled since it hit its low point of the Great Recession on March 9, 2009. There were plenty of stocks to buy back then that offered incredible value. For investors that weren’t old enough or didn’t have the resources to invest back then, it may seem like you’ve missed the boat. After all, the old investing adage is to buy low and sell high.
Almost every stock worth owning has a much higher share price now than it did on the day the S&P 500 bottomed in 2009, but just because share prices were lower back in 2009 doesn’t necessarily mean that buyers were getting a better deal.
As the stock market has risen, so have corporate earnings. Even though investors are now paying more for each share of stock, they are also getting more earnings bang for their buck. Here’s a look at three stocks that are a better value today than they were on March 9, 2009.
Stocks to Buy: Goldman Sachs Group Inc (GS)
Goldman Sachs Group Inc (NYSE:GS) was right in the eye of the Great Recession storm. The company even received a $10 billion bailout from the government during the meltdown.
In the years since the crisis, new regulations and capital requirements severely hindered bank earnings. For GS stock, the heaviest weight has been the Volcker Rule. The Volcker Rule is a provision in the Dodd-Frank Act that prevents banks from performing certain types of speculative trading.
Despite the regulatory headwinds, GS has found a way to ramp up its earnings in recent years. Goldman’s net income is up more than 180% since 2009, making GS stock an even better value today than it was back then. Goldman’s current price-to-earnings ratio is only 14.2, 19% lower than it was on March 9, 2009.
Looking ahead, Donald Trump has pledged to eliminate many of the regulations that have been holding back the big banks. Goldman stock is in an even better position and it is a better value today than it was in the years following the Great Recession.
Stocks to Buy: Visa Inc (V)
The market for Visa Inc (NYSE: V) is dramatically changing. While mobile competition from PayPal Holdings Inc (NASDAQ:PYPL), Apple Inc. (NASDAQ:AAPL) and others may certainly disrupt the traditional payment business, Visa should be just fine. A recent BI Intelligence report concluded that merchant service providers (MSPs) are much more threatened by mobile payment competition than the credit card companies themselves.
The proof is in the pudding. Even with the emergence of platforms like Apple Pay, Visa’s profits have exploded more than 400% since 2009. BMO Capital analyst Paulo Ribeiro expects Visa’s double-digit earnings growth to continue in the long-term. He believes V stock will continue to benefit from the slow death of cash and check payments.
Even though V stock has been a top performer in the market since the Great Recession, that incredible earnings growth means Visa’s P/E ratio is down 60% from where it was when the market bottomed in 2009. In other words, V stock is a much better value today than it was back then.
Stocks to Buy: Berkshire Hathaway Inc. ( BRK.B)
If you’re looking for stocks to buy in the market today that would make 2009 investors envious, it doesn’t get much better than Berkshire Hathaway Inc. (NYSE:BRK.A, NYSE:BRK.B). The holding company of the most iconic and successful value investor of all time is currently trading at a better value than it was during the Great Recession.
Warren Buffett’s BRK.B stock now has a P/E of 17, which is down roughly 21% since March 9, 2009. Buffett and Berkshire have done very well since the Great Recession. But thanks to BRK.B’s 823% income growth, investors now get a better value for Berkshire shares than they did at the market bottom.
If anyone can find value in the stock market after it climbs 235% in eight years, it’s the Oracle of Omaha. Instead of losing sleep over stocks to buy with the market at an all-time high, why not just invest in Buffett? Unlike high school, there’s no penalty for cheating off of the smart kid’s paper.
As of this writing, Wayne Duggan did not hold a position in any of the aforementioned securities.