5 Incredible Value Stocks To Buy For 2020

So far in 2019, various events like the U.S.-China trade war, Brexit-related uncertainty and the Fed’s decision to cut interest rates thrice in the year have impacted stocks from all sectors in some way or other.

Still, the S&P 500 index has been hitting new all-time highs. So far this year, the S&P 500 rose 26.1%. Because of this rise, most of the stocks are likely to have become expensive for investors at present.

Nevertheless, this should not be considered as bad news by value investors, who benefit from buying stocks that are trading at a discount or are less expensive because all stocks have not been able to match the stock market’s rally.

Due to the global concerns — including the trade war — there are some stocks, which did not appreciate much in price, and are still trading at a reasonable discount and hence seem to be good investment options for value investors.

In fact, value investors search for those stocks that they think the stock market is underestimating. Value investing is one of the most popular ways to find such undervalued stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys or offer tantalizing discounts when compared to fair value?

Notably, these investors try to look at several key metrics and financial ratios, which are crucial in the value stock selection process.

Two of the most commonly used ratios are price/earnings (P/E) and price/sales (P/S), which are used to determine whether a stock is trading cheap.

The P/E ratio shows us how much an investor is willing to pay for each dollar of earnings in a given stock and is one of the most popular financial ratios in the world. By comparing the P/E ratio of a given stock with that of the broader market or with the stock’s sector, an investor finds out whether the stock is currently trading cheap.

Similarly, the P/S ratio compares a given stock’s price to its total sales, where, like the P/E ratio, a lower reading is considered better. Some people prefer this metric more than P/E because this ratio considers sales, something that is far harder to manipulate with accounting tricks than earnings. Also, earnings can be negative while sales cannot.

So, it can be concluded that there are still a number of stocks, which are good investment options for value investors. Hence, such investors should buy these stocks for 2020.

We have taken the help of the Zacks Investment Research

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Written By: Zacks Investment Research