Seeking out value and growth in an uncertain market.
In 2022, many investors are struggling to make sense of things as inflationary pressures and changes in interest rate policies continue to cause uncertainty. Some folks are going decidedly “risk off” as they seek out value-oriented picks with dividends and strong balance sheets, and others are looking to get a foothold in growth names that are finally reasonably priced after the recent pullback. Whatever your approach, the following list of stocks should offer some food for thought. Here are four top stocks showing strong value metrics and four more showing significant growth numbers.
Growth stock – Block Inc. (ticker: SQ)
Some investors may know Block because of its dominant mobile payments platform Square. And honestly, despite the rebranding of the company in late 2021 with an eye toward blockchain applications, it’s still this core unit that’s driving near-term performance of the business. In February, shares surged more than 20% in a single session after strong earnings that showed a 47% leap in gross profits over the prior year, driven by 37% growth in its Cash App payment arm. And while shares have struggled this year along with other Big Tech names, we could see another impressive earnings report in May that proves the real long-term growth potential of this mobile payments leader.
Value stock – General Motors Co. (GM)
Old-school automaker GM may not have the brand cache that other dynamic electric vehicle companies have right now. However, this is a stock with a storied history and a rock-solid operation that isn’t going anywhere. The company sold just under 6.3 million vehicles worldwide last year, and has tens of billions of value tied up in its property, facilities and inventory to give a real foundation for this stock instead of just pie-in-the-sky predictions on future business. What’s more, investors haven’t been particularly keen on the stock so you can get it at bargain pricing right now. GM trades for less than 6 times next year’s earnings, which is roughly a third of the typical stock in the S&P 500. GM certainly has growth challenges ahead amid changing tech trends and consumer tastes, but that doesn’t change the fact there’s real value in this auto stock.
Growth stock – Host Hotels & Resorts Inc. (HST)
You may not think of a real estate investment trust, or REIT, like Host as a growth-oriented name. However, this REIT’s focus on luxury and “upper-upscale” hotels makes it a perfect play right now for the resurgence of summer travel in the wake of waning pandemic restrictions. The company currently owns roughly 80 properties in the United States under brands such as Ritz-Carlton, Hyatt and Westin. These include locations on Miami’s South Beach, the Hawaiian Islands, California’s Coronado region, and other in-demand areas. Thanks to this amazing portfolio of destination hotels, Host is predicting a surge back to profitability and revenue growth of more than 50% this fiscal year. HST stock is up almost 20% in a down market thanks to those strong numbers.
Value stock – Lowe’s Cos. Inc. (LOW)
Lowe’s is seen by some as the lesser home improvement chain out there, but it’s no slouch with roughly 2,000 locations across the U.S., about $96 billion in annual revenue and a big market value of roughly $130 billion at present. But what value investors may like to know is that Lowe’s is much more reasonably priced than other retailers out there, with a forward price-to-earnings ratio of less than 15 and a price-to-sales ratio of about 1.4. Both of those readings are significantly lower than its peer Home Depot Inc. (HD) as well as below market-wide averages. If you’re looking to play home improvement or housing trends, then LOW could be a better value investment than some of the other higher-profile names out there right now.
Growth stock – Palo Alto Networks Inc. (PANW)
Cybersecurity has been in focus as Russia’s invasion of Ukraine has sparked fears of cyberwarfare in addition to concern about the potential for damage and destruction across Eastern Europe. The company is predicting 20% revenue expansion for the full fiscal years of both 2022 and 2023, with earnings set to grow by roughly the same amount. Shares rallied strongly after its February earnings report showed this strong uptrend, and there’s every reason to expect Palo Alto to continue to deliver for the rest of 2022 even as other stocks struggle in the current environment. Even after a recent dive, shares are up 4% this year as of April 27.
Value stock – Wells Fargo & Co. (WFC)
Admittedly, Wells Fargo has had a rough few years after a series of scandals and abuses. However, it remains the fourth-largest U.S. bank — and Wall Street’s negativity recently has created a bargain buying opportunity for investors in this massive $170 billion financial powerhouse. Consider that WFC stock currently trades for a price-to-book ratio of just 1.1, compared with closer to 1.3 for Bank of America Corp. (BAC) and 1.5 for JPMorgan Chase & Co. (JPM). Additionally, the stock just boosted its dividend 20% to $1 annually — but that payout is well under the projected $5.17 in earnings per share next fiscal year. Throw in a rising interest rate environment that creates a tail wind for all lenders like WFC, and there’s a lot to like about this value banking stock right now.
Growth stock – McKesson Corp. (MCK)
Health care supply leader McKesson provides generic and over-the-counter drugs to clinics and hospitals, along with surgery tools and information management solutions. There are few things that are certain in the U.S. economy right now, but the fact that folks will continue to get ill and need health care is about as sure a thing as you’ll find. MCK is leaning on its deep relationships and $50 billion footprint to expand even further, with projections for 10% revenue growth this fiscal year. What’s even more impressive, however, is that earnings per share should skyrocket more than 35% over the prior year if projections hold. While some health care names have fallen out of favor now that we’re largely beyond the pandemic, this specialized health care play is clearly cashing in. Case in point: Shares are up more than 25% in 2022 as its peers have struggled mightily.
Value stock – International Business Machines Corp. (IBM)
There are assuredly faster-growing stocks out there in the information technology sector than IBM, a company founded more than 100 years ago. But IBM still has staying power and a store of value that makes it an attractive option right now. Thanks to deep enterprise technology relationships in software, consulting and IT infrastructure, the company is incredibly profitable. What’s more, though “Big Blue” is predicting its earnings per share will top $10.50 next fiscal year, IBM’s generous dividend yield of 4.9% is actually just $6.60 per share at present. That means these payouts are not just sustainable but ripe for future increases — even while other tech stocks don’t even pay a penny to shareholders in dividends.
4 growth stocks and 4 value stocks to buy:
— Growth stock – Block Inc. (SQ)
— Value stock – General Motors Co. (GM)
— Growth stock – Host Hotels & Resorts Inc. (HST)
— Value stock – Lowe’s Companies Inc. (LOW)
— Growth stock – Palo Alto Networks Inc. (PANW)
— Value stock – Wells Fargo & Co. (WFC)
— Growth stock – McKesson Corp. (MCK)
— Value stock – International Business Machines Corp. (IBM)
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Update 04/28/22: This story was published at an earlier date and has been updated with new information.