Stocks are starting to feel a little frothy. As an outlook, S&P500 The company is currently valued at more than 23 times historical earnings and more than 21 times this year's expected earnings. This is a harsh assessment by almost any standard. However, it is especially steep in a high interest rate environment. Higher borrowing costs increase the cost of financing growth, which works against growing companies and their stocks.
However, what works against growth stocks often works in favor of value stocks as well. And there are still plenty of affordable value stocks to consider getting into. Here, we take a closer look at three of the best value stocks to buy now and hold for years, given that interest rates are likely to remain near current levels indefinitely.
western oil
If you think the world's oil use is coming to an end now that consumers have access to environmentally friendly alternatives, think again. The U.S. Energy Information Administration suggests that renewable energy only accounts for about 12% of the nation's total electricity generation. The country's single largest energy source remains oil, accounting for 36%, while natural gas, which is often extracted along with oil, accounts for 32% of U.S. energy use. These numbers are in line with other parts of the world.
But change is afoot. At the same time as global electricity demand continues to grow, it is taking shape incredibly slowly. Standard & Poor's believes that in 2050, the world's largest source of energy will still be oil, with renewables a close second. Natural gas will still occupy a respectable third place.
input western oil (NYSE:OXY).
While the rest of the energy industry is focused on an eventual contraction in oil prices, Occidental CEO Vicki Holub says the company will establish new sources of supply now for 2025. It emphasizes that. As she said when speaking at this year's World Economic Forum, the time is now. She said oil prices will remain in the $80 to $85 per barrel range for an extended period of time because “the world is running out of oil.” For example, the impending acquisition of CrownRock is one way the company is securing more oil and gas supplies for the future.
That said, Occidental is not blind to the foreseeable future. It also tackles the dirty side of the oil business. As an example, we are developing technology that (literally) sucks carbon dioxide out of the air before it harms the environment. This captured carbon dioxide is also used as a means to improve the amount of oil that an oil well ultimately produces.
You can get into Occidental stock at less than 20 times this year's expected earnings per share, but above that, the stock trades at just 14.4 times next year's expected earnings per share of $4.43.
american bank
This is not the best time to be in the banking industry. Not only is the economic downturn reducing demand for banking services, but consumers and businesses alike are starting to miss loan payments. Subsequent write-offs have taken a heavy toll on banks' profits. That's a big reason why bank stocks have performed below average recently.
However, take a step back and look at the big picture. Banking is a business the world will never need. And right now, nothing is happening to banks that they have never experienced and survived before. In fact, like all cyclical headwinds, this one is definitely a long-term buying opportunity. As Warren Buffett says, “Be afraid when others are greedy, and be greedy only when others are afraid.”
And if you're ready to gorge yourself on bank stocks that many others are afraid to own at the moment, why not start with the bank stocks that Buffett loves? american bank (NYSE:BAC),Currently berkshire hathawaysecond largest shareholding.
We are far from perfect, and we are not immune to industry-wide challenges. Last quarter's revenue decreased compared to the same period last year, but loan charge-offs and write-downs increased.
But overall, BofA is holding up pretty well. Performance indicators such as efficiency ratios and return on equity remain stable year-on-year, while capital structure health indicators such as common stock levels continue to rise gradually. Much of this resilience simply reflects the bank's massive size and ability to weather any subsequent challenges. Bank of America is the second largest bank in America in terms of assets.
New entrants will likely buy BofA stock at a price-to-earnings ratio of less than 12 times. But perhaps a more compelling reason to jump on the value stock now is his current dividend yield of nearly 2.7%.
intel
add at the end intel (NASDAQ:INTC) Add it to your list of value stocks to buy and hold for years.
Technology stocks generally do not qualify as value stocks. And for many years this would not have been the case. But time, scale, and a series of unfortunate development failures have combined to cause Intel stock to underperform all the way to value status. The company's current forward price-to-earnings ratio of 31x is a bit frothy, but next year's more standardized earnings per share forecast of $2.24 puts the P/E ratio at less than 20x. This is an unusually low number for a high-tech company. This friend's name. Perhaps more importantly, this improvement in brewing profits finally reflects the potential that Inter has accumulated over the years.
For the record, Intel remains the top brand of computer processors. However, names like Nvidia and Advanced Micro Devices Competitive pressures have increased significantly, not only on the consumer side but also on the business side. Intel was poorly prepared for the rapid rise of these rivals. Underscoring this challenge is Intel's famous struggle to begin mass production of 7-nanometer chips…a stumbling block that many investors seemed unwilling to forget.
However, the past few months have definitely been a turning point for Inter. Not only did the company announce its first processor with AI acceleration technology late last year, but just last month it announced a deal with the company. microsoft The company is building custom-designed chips for software giants. This is the first major customer (publicly known, anyway) for the company's nascent contract manufacturing business.
It could be years before Intel's foundry business poses a serious threat to third-party manufacturing giants. taiwan semiconductor, this is an incredible opportunity to come to fruition at the same time that Intel's own brand of chips is finally sparking buyer interest again. It appears that the market has not yet factored in this quiet tailwind.
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Bank of America is an advertising partner of The Motley Fool's Ascent. James Brumley has no position in any stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Bank of America, Berkshire Hathaway, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Intel and Occidental Petroleum and recommends the following options: long January 2023 $57.50 calls on Intel, long January 2025 $45 calls on Intel, A long January 2026 $395 call on Microsoft, a short January 2026 $405 call on Microsoft, and a short May 2024 call on Intel is $47. The Motley Fool has a disclosure policy.
Do you have $5,000?Keep Buying These 3 Value Stocks for Years to Come” was originally published by The Motley Fool
