Investing in value stocks can be a great way to buy into companies at a discount. As we venture into 2024, the allure of value investing can often be overlooked by growth investors. Value investing is a stock picking strategy that focuses on company’s trading below their intrinsic or book value.
If you look for exposure to value stocks, you hope to buy them at a discount for significant outperformance over the long term. Warren Buffett, the champion of value investing said, “It is better to buy a good company at a fair price, than a fair company at a good price.” This means you must choose the value stocks very wisely. With investors heavily focused on growth in 2023, value stocks can present great opportunities for those who can remain patient and leverage time in the market.
Below are my top three value stocks targeting at least 25% upside!
McDonald’s Corp (MCD)
McDonald’s Corp (NYSE:MCD) stands as a compelling value stock to buy for 2024. The company is setting up for rapid expansion plans which could spur top line revenue growth through 2027.
McDonald’s has had a strong fiscal 2023 year thus far. After coming off a year of slow growth in 2022, revenue and EPS have risen substantially. In Q3 2023, revenue increased 14% YOY to $6.69 billion. EPS skyrocketed 18% YOY to $3.17 per share. Despite macroeconomic uncertainties and higher interest rates, McDonald’s comparable sales growth reflected the company’s strong execution.
Furthermore, the company announced huge expansion plans to add an additional 8,802 restaurants by 2027. This could finally be the catalyst to grow top line revenue as it has stagnated in recent years. As one of the strongest brands in the world, McDonald’s is one of the best value stocks to buy for 2024.
JPMorgan Chase (JPM)
JPMorgan Chase (NYSE:JPM) stock is up more than 10% in the last month as investors anticipate fed rate cuts in 2024. Even as JPMorgan saw record net income income in fiscal 2023, investors steered away from financial stocks.
However, the story is looking much different with the new macroeconomic backdrop. Bank stocks appear to be cheap, and the elephant in the room is in the best financial shape in the company’s history. JPMorgan will be ending off the year with record profits, driven by higher interest rates.
In Q3 2023, JP Morgan’s revenue grew 23% YOY to $39.9 billion. Net interest income rose 30%, hitting a record $22.9 billion. JP Morgan also capitalized on the regional banking crisis earlier this year, acquiring First Republic’s (OTCMKTS:FRCB) consumer loan assets for pennies on the dollar. As of September 2023, JP Morgan had $1.4 Trillion in cash and marketable securities. With a P/E of 10, JPM is still cheap making it a great value stock to keep on your radar.
Berkshire Hathaway (BRK-A, BRK-B)
Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) remains as a pinnacle when it comes to value investing. The company is majority owned by Warren Buffett, often revered as the king of value investing.
Berkshire Hathaway is currently up 15% YTD, and 2024 could prove to be another solid year. Over the last decade, Buffett has had a difficult time beating the market. During the same period Berkshire has compiled a record cash pile of $157.2 billion.
It seems that the company has yet to see a reason to deploy capital into the markets. While they have made small investments in 2023, there has not been anything substantial. Now with interest rate cuts on the table for 2024, Buffett might be more aggressive with his investment strategy. Additionally, investors can sleep well at night knowing the company is both patient and well capitalized in their asset allocation strategy. This will allow them to pounce on opportunities when present, allowing for potential outperformance over the long term.
On the date of publication, Terel Miles 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.
