For more than a decade, growth stocks have been the talk of Wall Street. Historically low lending rates have rolled out the red carpet for fast-paced companies and allowed them to borrow cheaply in order to hire, acquire, and innovate.
But what you might not realize is that value stocks have actually outperformed growth stocks over the very long run. Since value stocks are profitable and time-tested, they’re the perfect place for patient investors to put their money to work.
Below are five value stocks that could make you richer in 2022.
The days of General Motors (NYSE:GM) being just another stagnant auto stock are gone. The electrification of automobiles has placed a multi-decade growth opportunity on the company’s doorstep, and it’ll undoubtedly run with it.
In June, General Motors announced plans to up its investments in electric vehicles (EVs), autonomous vehicles, and batteries to $35 billion by 2025. The ultimate goal is to roll out 30 new EVs globally by mid-decade. Further, the company anticipates having two plants devoted to EV battery production up and running by 2023.
The great thing about EVs is that they’re a global trend with incredible momentum. Not only does GM have excellent branding power in the U.S., but it has a good chance of gobbling up significant market share in China, the world’s top auto market. General Motors likely delivered in the neighborhood of 3 million vehicles in China last year, which should provide it with the branding power and infrastructure to grow EV sales rapidly in the No. 1 auto market.
Best of all, General Motors is inexpensive. Shares can be purchased for less than nine times forward-year earnings and a price-to-earnings growth (PEG) ratio below one — a PEG ratio below one is considered to be undervalued.
AGNC Investment Corp.
Mortgage real estate investment trust (REIT) AGNC Investment Corp. (NASDAQ:AGNC) is another value stock that could make you richer in the new year.
The mortgage REIT industry might sound complicated, but it’s fairly straightforward. AGNC aims to borrow money at low short-term rates and use this capital to purchase higher-yielding long-term assets, such as mortgage-backed securities (MBS). The difference between the average yield from MBSs and its average borrowing rate is known as net interest margin.
What’s interesting for mortgage REITs is that they often perform best during an economic recovery, which is where we are now. Recoveries are typically characterized by a steepening yield curve — i.e., when the gap between short-term and long-term Treasury …….