Value stocks are finally getting the love they deserve. Last year was dominated by growth stocks mainly because they provided outsized gains compared to the broader market.
One can understand the allure of growth stocks. After all, they are experiencing explosive growth in the current volatile environment, and everyone wants a piece of the action.
The stocks included in this list are stable investments that suffered a lot due to the novel coronavirus pandemic.
Now that we are firmly on the path to recovery, value stocks are coming back into fashion in a big way.
However, when buying value stocks, you have to make sure you park your capital in companies with healthy fundamentals and a history of bullish trading activity.
So, let’s do a deep dive on five value stocks that are primed and ready for the summer:
- JD.Com (NASDAQ:JD)
- Alibaba Group Holding (NYSE:BABA)
- Apollo Global Management (NYSE:APO)
- Advanced Micro Devices (NASDAQ:AMD)
- Visa (NYSE:V)
Value Stocks to Buy: JD.Com
If you keep up with Chinese e-commerce, chances are you have heard of JD.Com. It provides online retail, online marketplace, and marketing services in China and serves as the main competitor for Alibaba.
Much like other stocks during the tech selloff, JD.Com suffered massive blows. After closing at $106.88 on Feb. 17, shares closed last Friday under $74 a pop, a nearly 31% discount. It should open this morning around $76.50.
In the last five years, though, JD has outperformed the S&P 500. So you have all the makings of a solid stock that is having a tough time as of late. Essentially, what this list is all about.
Now let’s talk fundamentals.
In the first quarter, the Beijing-based company reported net revenue of 203.2 billion yuan in the quarter ended March 31, an increase of 39% year-on-year. Excluding items, JD.com posted a profit of 2.47 yuan per American depository share (ADS), beating analysts’ expectations of 2.26 yuan by 9.2%.
This is not new territory for the company. On Mar. 11, JD.com reported its fourth-quarter and full-year 2020 earnings. In that earnings release, the company highlighted that it grew its active user base by nearly one-third in a single year and increased revenue and EPS by 31.4% and 187.5%, respectively.
Despite this awesome performance, the company is trading at a steep discount to its 52-week high. No wonder investment guru Louis Navellier likes this one so much.
In a very rare turn of events, Alibaba, China’s (and, by some measures, the world’s) biggest online commerce company, is trading at a nice discount, falling almost 10% in the last month. That is despite excellent performance during the pandemic.
The only exception is the latest quarterly results. Alibaba posted a net loss in the March quarter of 5.47 billion yuan, its first operating loss as a public company. The main reason is a $2.8 billion fine levied against the Chinese tech giant for antitrust violations.
However, this is a minor blip for Alibaba. In fact, many investors celebrated the result by pushing the stock northward after the fine was announced.
Many believed China would take sterner action against the company, but a $2.8 billion fine is chump-change for this cash-rich behemoth.
If you exclude the fine, Alibaba is progressing at a decent clip. In its fiscal fourth quarter, the company reported revenues of 187.39 billion yuan, increasing 64% year-over-year and handily topping analyst estimates of 180.41 billion yuan.
Alibaba’s core commerce business was responsible for the massive revenue surge, raking in 161.36 billion yuan, a 72% year-on-year rise as online shopping patterns remain strong.
The only thing going against this stock is the fact that it has a home base in China. The U.S. has indicated that it could delist Chinese companies if they do not comply with U.S. auditing codes.
Ultimately, this is what is weighing down the sentiment for Chinese stocks, and it does not have anything to do with BABA’s fundamentals. Still, the fact that the stock is so cheap means you can snap it up at a discount.
Value Stocks to Buy: Apollo Global Management (APO)
Apollo Global Management is an asset-light alternative asset manager that made headlines recently when it agreed to acquire Athene (NYSE:ATH) in an all-stock transaction.
The New York-based global alternative investment manager already owned about 35% of ATH. But now, it will completely take over the retirement services company. The reason why Apollo is on this list is that investors do not necessarily like the merger.
In the eyes of many, it is just one more example of a cash-rich business purchasing a capital-intensive one.
However, the merger will generate accretion of $1.38 per share or 68% on 2020 combined after-tax earnings. In addition, co-founder and CEO of Apollo Global Management Marc Rowan said, “my expectation that we will get excess capital from the Athene leg.”
Regardless, the merger has created a buying opportunity for investors that wanted to build a position in their portfolio regarding this stock.
Advanced Micro Devices (AMD)
Advanced Micro Devices and Nvidia (NASDAQ:NVDA) are the two dominant players in space.
Although both are highly overvalued by most estimates, AMD is trading at a more reasonable valuation.
Readers of this space know that I am very bullish on AMD. New console sales, data center growth, and the soon-to-be-released chips continue to increase AMD’s market share compared to Intel (NASDAQ:INTC) and Nvidia.
These consoles are selling like hotcakes. Sony is actually having a lot of trouble keeping up with the demand. Hence, the main thing AMD will have to worry about is maintaining a robust supply chain.
Value Stocks to Buy: Visa (V)
V stock crashed at the height of the pandemic, an unfortunate casualty of the crisis. However, its business is rock solid and has been for a while.
The recovery started in June last year after Visa’s transaction volume bottomed out in April. Then, when Visa’s card-present volumes dropped significantly year-over-year, online transactions came to the rescue more than making up for the decline.
It makes sense. Most e-commerce companies are registering record sales during the pandemic. Considering this crisis will not end soon, online transactions will continue to increase exponentially. Even after a complete recovery, it is not like Visa’s business will struggle moving forward.
Due to an asset-light model, the company has a very strong balance sheet with plenty of cash. Visa has put it to good use by repurchasing billions worth of stock.
The payments technology company has beaten analyst estimates five quarters on the trot. Yet, despite this positive performance, the stock is down 2.6%, making it an ideal candidate to add to your portfolio.
Out of all the entrants on this list of value stocks, Visa is the most enticing due to a strong history of growth, asset-light model, excellent tailwinds, and positive performance during the pandemic.
On the date of publication, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio.