It takes guts to be a value investor these days. But the top-performing investment newsletters have no shortage of courage. By value, I’m referring to stocks that are out of favor, trading for relatively low ratios of price-to-earnings, book value, sales, and so forth. Value’s opposite is growth: Stocks in this latter category typically trade for high valuation ratios.
All four of these stocks are instead solidly in the “value” category: Their average trailing 12-month PE ratio, for example, is 35% lower than the S&P 500’s SPX, -0.86% . Their average price/book ratio is 26% lower, and their average price/sales ratio is 10% lower. And given their status as value stocks, it is not a surprise that they have been lagging of late.
This is, and always has been, the classic refrain of the value investor, of course. Is there reason to believe that the newsletters’ faith in these stocks will be rewarded, even though value has lagged for the last 13+ years? Yes, and one reason is these newsletters’ excellent long-term records. It’s beyond the scope of this column to review the statistical tests that the authors used in analyzing each of these explanations, but you should read their report if interested. They rejected those hypotheses that would imply that value is permanently dead and concluded instead that “the stage is set for potentially historic outperformance of value relative to growth over the coming decade.”Mark Hulbert is a regular contributor to MarketWatch.
If it's not picked by Motley Fool, I'm cool.
jimcramer
My Apple stock, bought in 1985, is doing beautifully.
What’s that got to do w the oscars tho
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