Value stocks to watch is the equity market’s version of Godzilla Minus One. When released in the U.S., the understanding was that it would only feature a limited run. After all, foreign-language films don’t really do so well here. But then, the film earned critical acclaim, inspiring other moviegoers to check it out.
And that’s basically the case for value stocks for 2024. While technology enterprises like Nvidia (NASDAQ:NVDA) skyrocketed thanks to their relevance to burgeoning fields like artificial intelligence, many other compelling stories just fell by the wayside. Next year, you can make things right by giving the less-heralded names a chance.
Now, just like the new Godzilla film, it’s probably not going to challenge the stalwarts on a pure nominal basis. However, pound-for-pound, these overlooked enterprises might punch above their weight. With that, below are enticing value stocks to watch in 2024.
IBM (IBM)
What it is: A legacy tech giant, IBM (NYSE:IBM) makes an intriguing case for value stocks to watch. Sure, it’s not the most exciting idea out there. However, with its combination of technical relevance and robust passive income, it’s an idea you don’t want to ignore.
Relevance: Again, a lot of people talk about Nvidia thanks to its semiconductors facilitating new innovations such as generative AI. But if you’ve ever worked with such platforms, you know that it can be frustratingly hit or miss. On the other hand, IBM has long been developing AI and machine learning protocols such as Watson. And it has real use cases from its many enterprise-level clients.
Pros: Part of the positive catalysts is that few are respecting IBM. And that’s a good thing for investors willing to take a chance. Currently, shares trade at a lowly 16.18x forward earnings multiple. It also trades at an attractive 12.96x free cash flow (FCF). Combined with the forward dividend yield of 4.13%, IBM is one of the value stocks for 2024.
Cons: IBM stock has already been on the move so the upside could be limited.
General Motors (GM)
What it is: Another legacy enterprise but this time tied to the automotive industry, General Motors (NYSE:GM) is one of the storied companies in American corporate history. These days, it’s best known for its pivot to electric vehicles.
Relevance: Strictly by the numbers, GM isn’t particularly impressive, having only gained 7% on a year-to-date basis. However, the automaker has an opportunity to leverage its many brands – such as the Hummer – and convert them to run on battery power. In addition, GM hasn’t given up on its combustion-based roots. Case in point is the latest-generation Corvette, which continues to enjoy strong demand.
Pros: On paper, it’s one of the value stocks to watch next year. Trading at only 4.61x forward earnings, that’s well below the sector median of 10.96x. As well, the market prices GM at 0.68x book value, below nearly 78% of its peers. Lastly, GM carries a moderate buy assessment with a $45.91 average price target, implying almost 27% upside.
Cons: Since “relaunching” in 2010, GM practically hasn’t gone anywhere. Thus, patience may be necessary.
Carriage Services (CSV)
What it is: An uncomfortable topic but a necessary one, Carriage Services (NYSE:CSV) plies its trade in the “final” services industry. Given the sensitivities of the SEO algorithms, I think I’ll just end the talking point there and move on to its relevance.
Relevance: Well, if you want to talk in an extremely cynical manner, people “transition” to a different form of reality. Again, I’m not sure if I want to incur an SEO penalty so I’ll leave it at that. What I will say is that globally, the final services segment reached a valuation of $121.57 billion in 2021. Further, the sector may expand at a compound annual growth rate (CAGR) of 4.2%.
Pros: If you want to hit the cynicism, the massive size of the baby boomer market gives Carriage a large addressable market. Also, Americans are collectively getting unhealthier, also a “benefit” to CSV as one of the value stocks to watch. Lastly, shares trade at a subterranean forward multiple of 10.6x.
Cons: The company could use some work in the balance sheet.
On the date of publication, Josh Enomoto 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.
