The people who were late to the fear of missing out “buy momentum” club have gotten a hard lesson in stock market investing recently. With the Nasdaq at the 10% correction level in less than a week, it makes sense for investors to consider looking at other stock strategies, and one that has been out of favor for years may be coming back in vogue.
It’s been years since value investing was in style, but that trend may be coming to an end. Value investing is an investment strategy that involves picking stocks that appear to be trading for less than their intrinsic or book value. Value investors actively ferret out stocks they think the stock market is underestimating.
The analysts at BofA Securities have 10 top value picks for the firm’s clients, and five look like great ideas for growth investors looking to steer away from the momentum stocks for a while, especially as we get closer to the November election. Given the rancor over the election, and the numerous items in the headlines, you can bet volatility will continue to move higher as we approach November.
While all five of the top value picks are rated Buy at BofA Securities, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
HCA
Positions in health care should continue to act well, and this is a market leader. HCA Healthcare Inc. (NYSE: HCA) offers health care services. The company serves patients in the United States, operating from its network of approximately 185 hospitals and 2,000 sites of care. Its hospitals provide diagnosis, treatments, consultancy, nursing, surgeries and other services, as well as medical education, physician resource centers and training programs.
With its founding in 1968, HCA Healthcare created a new model for hospital care in the United States, using combined resources to strengthen hospitals, deliver patient-focused care and improve the practice of medicine. The company has conducted a number of clinical studies, including one that demonstrated that full-term delivery is healthier than early elective delivery of babies and another that identified a clinical protocol that can reduce bloodstream infections in ICU patients by 44%.
BofA Securities has set a very large $172 price target on the shares, while the consensus across Wall Street is $147.19. The closing price of HCA stock on Tuesday was $132.53 a share.
Lincoln National
Insurance never goes out of style, and this is one of the top companies in the industry. Lincoln National Corp. (NYSE: LNC) operates multiple insurance and retirement businesses in the United States. It operates through four segments.
The Annuities segment offers variable, fixed and indexed variable annuities. The Retirement Plan Services segment provides employers with retirement plan products and services, primarily in the defined contribution retirement plan marketplace. This segment offers individual and group variable annuities, group fixed annuities and mutual fund-based programs, as well as a range of plan services, including plan recordkeeping, compliance testing, participant education, and trust and custodial services.
The Life Insurance segment provides life insurance products, including term insurance, such as single and survivorship versions of universal life insurance. It offers variable universal life insurance, indexed universal life insurance products and a critical illness rider.
The Group Protection segment offers group nonmedical insurance products, comprising short-term and long-term disability, statutory disability and paid family medical leave administration and absence management services, term life, dental, vision and accident, and critical illness benefits and services to the employer marketplace through various forms of employee-paid and employer-paid plans.
Investors receive a 4.47% dividend. The BofA Securities price objective is $44, and the consensus target price is $44.64. Tuesday’s closing price for Lincoln National stock was $35.82.
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