Forget Growth... It's Time for Value Stocks

Investors haven't cared about these kinds of stocks for nearly a decade now. They're too boring. But now, that has changed... [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [DailyWealth] Forget Growth... It's Time for Value Stocks By Dr. David Eifrig, editor, Health & Wealth Bulletin --------------------------------------------------------------- Growth had its multiyear run... Now it's time for value. As you know, once the dust settled from the financial crisis, growth was all the market cared about. Interest rates were near zero. Companies were able to borrow on the cheap to chase sales growth. Investors piled into growth names and didn't care much about profits. But that backdrop of zero-percent rates changed at the end of 2021. Since borrowing costs moved higher with interest rates, corporate spending has gotten more expensive. That's why every other day, we're hearing news about some tech company cutting jobs. Alphabet (GOOGL) announced it was laying off about 12,000 employees. Salesforce (CRM) cut roughly 10% of its workforce, about 8,000 jobs. And social media company Snap (SNAP) laid off 20% of its employees last year. According to Crunchbase News, more than 77,000 workers in U.S.-based tech companies have been laid off so far in 2023. These companies overhired to pursue growth... When interest rates were low and markets rewarded rising sales, that was the right strategy to drive stock prices. Now, with interest rates at multiyear highs, these companies have to scale back. We're seeing this reflected in the stock market, too. In short, growth is now out of favor. Value stocks are in... --------------------------------------------------------------- Recommended Links: [These Blue Chips Could Double (or More) This Year]( New analysis explains what's making these super risk-averse companies so potentially profitable in 2023. And according to one senior analyst, this corner of the market is poised for huge returns... no matter what the market does next. This week only, [click here for full details](. --------------------------------------------------------------- ['The EXACT Day Stocks Will Finally Bottom']( Goldman Sachs doesn't know... Bank of America doesn't know... Morningstar doesn't know... but Marc Chaikin believes he does. He called the bottom in 2020, just 24 hours before the fastest bull market in history. Now, Marc has spotted the NEXT market bottom... and he's sounding the alarm. Plus, he's sharing the names of what he says will be the best – and worst – performing stocks of 2023. [Click here for full details](. --------------------------------------------------------------- The past couple years have taught us that growth does not go up in a straight line forever... and that we need sources of energy... transportation for our supply chain... commodity metals to get pulled out of the ground... and robust utility infrastructure to keep the lights on. We need companies that produce real things. Of course, investors haven't cared about those kinds of stocks for nearly a decade now. They're too boring. That has changed. Value stocks are defined as stocks with low valuation multiples compared with either their historical averages or a broader index. They're often known as companies with slow top-line growth but lots of profit. Think of stocks like CVS Health (CVS) and Shell (SHEL). You can see the shift in the market's appetite in the two charts below... The first chart tracks the ratio between growth and value stocks. While growth led the way in 2019 and 2020, value has started to inch back into the spotlight... The second chart looks at a longer time horizon. If you compare the 10-year returns of value and growth, you'll see a cycle through history. And you'll also see we're dramatically low on the cycle right now – favoring value... This transition makes sense if you follow this historical cycle. Also, given that investors are worried about a coming recession, people will want to own value stocks because there's safety in cash flows. Value should continue to outperform growth... not only in the short run, but for many years to come. Here's to our health, wealth, and a great retirement, Dr. David Eifrig --------------------------------------------------------------- Editor's note: You can find more insights from Doc and his team by signing up for his free daily Health & Wealth Bulletin. Recent essays have covered how to "rehab your mind" after heart surgery... why the latest recession fears could actually drive the market higher... how to achieve your fitness goals with a simple technique... and many more ideas for improving your wealth and well-being in retirement. [Check it out right here](. Further Reading Exciting tech stocks soared at the height of the COVID-19 pandemic... only to crash in the bear market that followed. As value stocks take the lead, make sure you avoid these two former winners... [Read more here](. The economy is returning to normal after pandemic disruptions. And costs for producers are easing. Right now, one "boring" group of companies shows why price stability is returning to the supply chain – and, importantly, why inflation can continue to slow... [Learn more here](. --------------------------------------------------------------- [Tell us what you think of this content]( [We value our subscribers' feedback. 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