London, UK, 3rd August 2021, ZEXPRWIRE – Value stocks have done well in the year to date, but growth stocks are beginning to outperform more recently and seem like a better bet for investors. While value index is up 17% so far this year, it’s only at 14%. But over the past three months of 2018 where we’ve seen some volatility across markets, growth has been stronger with 11.5%, while their counterparts saw losses-of almost 2%. And June was particularly good where they gained 6% against 4.7%-a clear sign that things may be starting to shift from favoritism towards valuations as an investment strategy.
But Chelsea Investments broker says valuations aren’t going anywhere. And neither is the potential of value stocks for growth. When it comes to investing, it makes sense that you’re always looking to find an edge-whether through hard work and research or keeping up with relevant news. If a strategy has worked over the years it makes sense to at least consider it when you’re making your way through markets.
And while many investors will shy away from value stocks because of their seemingly underperforming growth counterparts, there’s a good chance that this won’t last long-and you can make out like a bandit in the process.
One of the reasons why value stocks have been so effective is because they’re based on valuations: how much something is worth. And the theory is that, generally, as a company’s value increases, so does its stock price-or at least it should.
Value investors tend to be long-term or buy and hold investors because they’re putting their faith in these valuations rising in the years ahead. They may not sell for many years unless a significant change occurs in the company or they’re feeling that it’s time to move on. But right now, there are some value stocks that you can buy and hold for years ahead, if not decades.
Canadian Natural Resources Ltd (NYSE:CNQ) is a great example of this. It’s valued around $36 billion-and just looking at its market cap is enough to know that it’s in the top 20 of Canada’s stocks. It employs over 12,000 people and operates across the world, with operations in Alberta being its main focus. While production is falling due to lower oil prices-something investors need to keep an eye on if they’re looking at investing in this value stock-, its net income increased 80% in the first quarter of 2018 year-to-$1.9 billion from $1.2 billion a year ago, with earnings per share increasing 53 cents to $1.30 compared to last year, thanks to higher revenue and lower operating costs.
CNRL’s cash flow generation is impressive too: it generated $8.5 billion in cash flow from operations for shareholders last year-partly thanks to its production of oilsands bitumen, which is one of the highest quality crude oil sources in the world, as well as natural gas liquids and conventional heavy crude oil reserves located across Alberta, Saskatchewan and British Columbia.
CNRL operates on a budget and has been doing well in its core operations. But what makes it a great value stock is the long-term forecast for production growth: analysts are seeing 24% revenue growth and earnings per share growth of 27% next year, while net income should rise 37%. That’s impressive considering that it will be three decades since the company was established.
Capital One Financial Corp (NYSE:COF): While CNRL is a great Canadian value stock, it’s not the only one. In the US, Capital One Financial Corp (NYSE:COF) is valued at $142 billion and has grown rapidly in recent years under CEO Richard Fairbank. The company employs roughly 50,000 people and operates online and in-store banks that offer products and services to customers worldwide.
Its products aren’t just banking, but also credit cards, loans, investments and more-and they offer all of these things through mobile platforms. Capital One is a commercial bank that’s not FDIC insured: That means you’re investing in a private company rather than one backed by the government like with other banks.
But that doesn’t mean it’s risky: the company is growing at a rapid rate and even just its digital platforms have been able to pull in $24 billion in deposits, double that of its traditional banking online platform. That means investors are actually flocking to Capital One’s commercial bank with over 13 million customers worldwide-and that number is growing rapidly, with roughly 1 million customers added in the first quarter of 2018.
Capital One’s mobile banking apps are extremely popular too: it has over 20 million users worldwide and its mobile deposits have increased by $2 billion since they were introduced just a year ago-with half of that increase coming from new signups alone. The company is operating on a budget and doing well, with revenues increasing 24% to $1.6 billion in the first quarter of 2018, thanks to higher interest rates and credit card balances. Plus, its earnings per share increased 25.5% year over year to $1.37-$a sign that it can handle lots of growth without sacrificing profitability.
Disclaimer: Our content is intended to be used for informational purposes only. It is very important to do your own research before making any investment based on your own personal circumstances. You should take independent financial advice from a professional in connection with, or independently research and verify, any information that you find on this article and wish to rely upon, whether for the purpose of making an investment decision or otherwise.