The quest for the most promising value stocks continues as the market has been overshadowed by growth companies in 2024. Identifying these hidden gems requires careful due diligence amid market volatility.
Value stock investing involves selecting companies that are trading below their intrinsic value. Investors can look at traditional valuation metrics like P/B ratio, P/E ratio, FCF and dividend yield. While this is only a small part of the equation, it is certainly a good place to start.
Now, let’s discover the three best-value stocks for 2024.
Berkshire Hathaway (BRK-A, BRK-B)
Berkshire Hathaway (NYSE:BRK-A,NYSE:BRK-B) is arguably one of the best value stocks with upside potential in 2024. They’re one of the world’s most recognized multinational conglomerates, holding nearly $1 trillion in market capitalization.
Berkshire Hathaway is most commonly known for its ties to legendary investor Warren Buffett. He has been the most outspoken advocate of the value investing strategy. Mr.Buffett has emphasized buying cash-flowing businesses with economically solid moats below their intrinsic value. This has certainly paid off, as the company has delivered tremendous returns for its shareholders since he took over.
However, investors are paying closer attention to the company now as Buffett sits on a record cash pile of $157.2 billion. As economic conditions become more favorable, there is a strong chance that he will put some of this cash to work. His next strategic bet could be huge, propelling the company to $1 trillion.
Procter & Gamble (PG)
Procter & Gamble (NYSE:PG) is an American consumer goods company headquartered in Cincinnati, Ohio. They’re one of the largest CPG companies in the world.
Investors may be on the fence after the company reported its latest Q2 FY24 financial results. Revenue grew a modest 3% from the year prior, with EPS declining 12% YOY. This was largely due to a non-cash impairment charge from a Gillette intangible asset. Furthermore, PG saw modest sequential growth in operating cash flow, hitting $5.1 billion in the quarter.
Procter & Gamble has strong pricing power capabilities, allowing them to expand gross margins and increase operating leverage. This has been evident over the last several decades, as the company marked its 67th year of consecutive dividend increases. In the quarter, the company returned $3.3 billion in cash to shareholders on record. This makes them one of the best-value stocks to snap up in Q1 2024.
Coca-Cola (KO)
Coca-Cola (NYSE:KO) is one of the best value stocks to invest in and keep on their radar for 2024. The company is on a roll, and its recent earnings results suggest growth will continue.
Coca-Cola should need no introduction as they are one of the world’s most iconic brands. Founded over a century ago, it is the world’s third-largest beverage manufacturer. Unsurprisingly, Warren Buffett, the Godfather of value investing, owns nearly 10% of the company. Additionally, their latest quarterly financial results signal a promising outlook for the future.
In Q3 2023, Coca-Cola’s revenue increased 8% YOY to $11.95 billion. Operating margin was in line with the prior year, with EPS up 9% to $0.71 per share. While presenting near double-digit growth, Coca-Cola’s cash flows continue to trend in the right direction. Currently, FCF is $7.9 billion, marking a $636 million increase from the previous year. Momentum has been so positive that CEO James Quincey raised the company’s top and bottom line guidance for FY23.
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.
