In this article, we discuss 15 best large-cap value stocks to buy. You can skip our detailed analysis of value stocks and their performance, and go directly to read 5 Best Large-Cap Value Stocks To Buy.
Value investing is an investment strategy that involves identifying undervalued stocks in the stock market. It was popularized by Benjamin Graham, often referred to as the "father of value investing" and mentor to Warren Buffett. The main principle of value investing is to focus on the intrinsic value of a company rather than its market price. The strategy often entails a long-term perspective, as the market may take time to adjust to the true value of the stock. Historically, value investing has proven its efficacy in the long run, delivering a total return of 1,344,600% since 1926, compared with a 626,000% return on growth stocks, as we mentioned in our article on 12 Undervalued Dividend Aristocrats To Buy.
The debate between growth and value stocks as the best picks for investment is a long-standing discussion, as both of them have given varied performances historically. During periods of economic expansion and optimism, growth stocks tend to outperform, while value stocks may shine during economic downturns or market corrections. Last year, when inflation was at its peak, value stocks declined by 7% globally, whereas growth equities saw a 28.6% drop. Moreover, value stocks in the US exhibited their strongest outperformance since the dot-com crash in 2000.
The AI frenzy has brought growth stocks into the limelight all over again this year. In May, the Russell 1000 Value Index experienced a 4% decline, while its growth counterpart recorded a similar-sized gain. To maximize returns, analysts advise including both value and growth stocks in one's portfolio. Wall Street Journal has highlighted that the average annualized five-year returns since 1984 have been similar for both types of stocks. However, there have been significant differences in returns over extended periods.
Investors often solely consider only growth or value strategy at a time. In this regard, large-cap stocks attract more attention from value investors due to their higher visibility and liquidity. Moreover, larger companies may be more closely followed by analysts, making it easier for investors to evaluate their intrinsic value. The Dow Jones U.S. Large-Cap Value Total Stock Market Index, a stock market index that represents the performance of large-cap value stocks in the US, gained 5.45% in the past 12 months. The index tracks some of the best value stocks in the large-cap space, such as The Home Depot, Inc. (NYSE:HD), Merck & Co., Inc. (NYSE:MRK), and The Procter & Gamble Company (NYSE:PG).
15 Best Large-Cap Value Stocks To Buy
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Our Methodology:
For this article, we focused on companies with a market capitalization above $10 billion and a price-to-earnings ratio of below 15. From this dataset, we picked 15 stocks with the highest number of hedge fund investors, according to Insider Monkey's database of 943 funds. The stocks are ranked in ascending order of hedge funds sentiment towards them.
American International Group, Inc. (NYSE:AIG) is a New York-based finance and insurance corporation that specializes in related services for its consumers. In the first quarter of 2023, the company reported net investment income of $3.5 billion, up from $3.2 billion in the same period last year. The company's net premiums written also showed a 5% year-over-year growth at roughly $7 billion.
As a dividend stock, American International Group, Inc. (NYSE:AIG) pays a quarterly dividend of $0.36 per share, which gives its shares a yield of around 2.61%. During the first quarter of 2023, the company returned $241 million to shareholders in dividends.
With a P/E ratio of 7.00, American International Group, Inc. (NYSE:AIG) is one of the best value stocks on our list, alongside The Home Depot, Inc. (NYSE:HD), Merck & Co., Inc. (NYSE:MRK), and The Procter & Gamble Company (NYSE:PG).
At the end of the first quarter, 46 hedge funds tracked by Insider Monkey reported having stakes in American International Group, Inc. (NYSE:AIG), the same as in the previous quarter. These stakes have a collective value of roughly $2 billion.
Delta Air Lines, Inc. (NYSE:DAL) is one of America's major airlines. The company provides services in domestic and international travel in over 60 countries. On June 15, the company reinstated its quarterly dividends that were suspended due to the pandemic in 2020. It announced a quarterly dividend of $0.10 per share (0.95% yield) for the last reported quarter.
Delta Air Lines, Inc. (NYSE:DAL) generated $12.8 billion in revenue in the first quarter of 2023, which showed a 37% growth from the same period last year. The company's operating cash flow for the quarter came in at roughly $3 billion and its free cash flow amounted to $1.9 billion. The stock is trading at a P/E multiple of 14.43x.
The number of hedge funds followed by Insider Monkey owning stakes in Delta Air Lines, Inc. (NYSE:DAL) grew to 56 at the end of March, from 51 in the previous quarter. These stakes have a collective value of over $1.37 billion. With over 6.2 million shares, GMT Capital is one of the company's leading stakeholders.
13. The Bank of New York Mellon Corporation (NYSE:BK)
Number of Hedge Fund Holders: 56
P/E Ratio: 13.56
The Bank of New York Mellon Corporation (NYSE:BK) is an American investment banking company that mainly provides investment management services to its consumers. The company's first-quarter revenues came in at $4.4 billion, which saw an 11% growth from the same period last year. During the quarter, it returned $1.6 billion to shareholders in dividends and share repurchases.
The Bank of New York Mellon Corporation (NYSE:BK)'s stock has a price-to-earnings ratio of 13.56, which places it as one of the best value stocks on our list. The company currently pays a quarterly dividend of $0.37 per share, which gives its stock a dividend yield of 3.45%.
As of the end of the first quarter, 56 hedge funds in Insider Monkey's database have stakes in The Bank of New York Mellon Corporation (NYSE:BK), up from 55 in the preceding quarter. These stakes have a total value of roughly $1.7 billion. Among these hedge funds, First Eagle Investment Management was the company's largest stakeholder at the end of March.
General Electric Company (NYSE:GE) is a Boston-based multinational company that operates in aviation, renewable energy, power, manufacturing, and other industries. As of June 24, its stock has a price-to-earnings ratio of 14.31.
For the first quarter of 2023, General Electric Company (NYSE:GE) reported a strong cash position as its operating cash flow came in at $155 million and its free cash flow amounted to $102 million. The company posted revenue of $14.5 billion, which showed a 14.4% growth from the same period last year.
General Electric Company (NYSE:GE) pays a quarterly dividend of $0.80 per share and its stock's dividend yield comes in at around 0.31%.
At the end of March, 59 hedge funds tracked by Insider Monkey owned stakes in General Electric Company (NYSE:GE), unchanged over quarter. These stakes are collectively valued at over $7.6 billion.
Vulcan Value Partners mentioned General Electric Company (NYSE:GE) in its Q1 2023 investor letter. Here is what the firm has to say:
“General Electric Company (NYSE:GE) was a material contributor during the quarter. With the successful spin-off of GE HealthCare in early January, the company operates in two major markets: GE Aerospace and GE Vernova. GE Aerospace powers three out of every four commercial flights. GE Vernova helps generate 30% of the world’s electricity and has a meaningful role to play in the energy transition. The company’s service activities, which are higher margin and more resilient, represent approximately 60% of revenue and 85% of its backlog. The company reported strong fourth quarter 2022 results and management’s 2023 outlook is positive.”
Chevron Corporation (NYSE:CVX) is next on our list of the best value stocks. The energy company's stock is currently trading at a P/E multiple of 8.24x. In June, the Royal Bank of Canada upgraded the stock to 'Outperform' and also raised its price target to $180. The firm appreciated the company's performance and its cash flow generation.
Chevron Corporation (NYSE:CVX) remained committed to its shareholder obligation in the first quarter of 2023. The company generated $7.2 billion in operating cash flow and its free cash flow for the quarter amounted to $4.2 billion. It also returned $6.6 billion to shareholders through dividends and share repurchases.
Chevron Corporation (NYSE:CVX) has been growing its dividends consistently for the past 36 years. The company currnetly offers a quarterly dividend of $1.51 per share, which gives its stock a dividend yield of 3.99%.
Chevron Corporation (NYSE:CVX) was a popular buy among hedge funds during the first quarter, as 64 funds tracked by Insider Monkey owned stakes in the company, up from 57 in the previous quarter. The consolidated value of these stakes is more than $23.6 billion.
With a P/E ratio of 13.61, Deere & Company (NYSE:DE) is also one of the best value stocks on our list. Deere & Company (NYSE:DE) is an Illinois-based manufacturing company that specializes in agricultural machinery and heavy equipment. In fiscal second quarter, the company recorded revenue of $17.4 billion, up by 30.1% on the year.
Deere & Company (NYSE:DE) has been paying regular dividends to shareholders since 1990. The company currently offers a quarterly dividend of $1.25 per share.
There were 65 funds that owned shares of Deere & Company (NYSE:DE) at the end of March, up from 63 in the preceding quarter. The stakes owned by these funds have a collective value of $2.8 billion. With roughly 4 million shares, Bill & Melinda Gates Foundation Trust was the company's largest stakeholder among the funds in our database.
Teck Resources Limited (NYSE:TECK) is a Canadian diversified natural resources company that is involved in mining and mineral development. In June, Morgan Stanley lifted its price target on the stock to $53 with an 'Overweight' rating, appreciating the company's performance.
In the first quarter of 2023, Teck Resources Limited (NYSE:TECK) generated an operating cash flow of C$1.1 billion (around $830,000). The company also returned $321 million to shareholders in dividends.
Teck Resources Limited (NYSE:TECK) was a part of 66 hedge fund portfolios at the end of March, up from 62 in the previous quarter. The stakes owned by these hedge funds are collectively worth over $2 billion.
An American energy company, ConocoPhillips (NYSE:COP) is next on our list of the best value stocks. In the first quarter of 2023, the company reported an operating cash flow of $15.52 billion, which fell by 19% from the same period last year. However, the company's operating cash flow grew to $5.4 billion during the quarter. It also returned $3.2 billion to shareholders in dividends and buybacks.
There were 72 funds in Insider Monkey's database that held stakes in ConocoPhillips (NYSE:COP) at the end of the first quarter, up from 67 three months earlier.
Oakmark Funds mentioned ConocoPhillips (NYSE:COP) in its Q1 2023 investor letter. Here is what the firm has to say:
“ConocoPhillips (NYSE:COP) is one of the largest and lowest cost U.S. exploration and production companies in the country, led by CEO Ryan Lance—in our view one of the best value creators in the industry. ConocoPhillips’s share prices fell in the first quarter as oil prices receded, which is not atypical. We were buying the company at prices where it could generate its entire market cap in free cash flow over the next decade while growing the production such that at the end of that time, the base of production would be one-third higher. This sort of reinvestment opportunity is unique to ConocoPhillips and clearly not reflected in the current share price.”
Pfizer Inc. (NYSE:PFE) is an American biotech and pharmaceutical company. In April, Bank of America maintained a 'Neutral' rating on the stock with a $45 price target, following the company's quarterly earnings.
In the first quarter of 2023, Pfizer Inc. (NYSE:PFE) returned $2.3 billion to shareholders in dividends, which shows that the company's cash position is strong for shareholder returns. The stock currently trades at a P/E multiple of 7.64, which makes it one of the best value stocks in the large-cap space.
At the end of March 2023, 73 hedge funds tracked by Insider Monkey owned stakes in Pfizer Inc. (NYSE:PFE), with a collective value of roughly $2.2 billion.
General Motors Company (NYSE:GM) is a Michigan-based automotive manufacturing company that also designs and manufactures automobile parts. In the first quarter of 2023, the company's revenue came in at nearly $40 billion, which showed an 11.1% growth from the prior-year period. The company's automotive operating cash flow for the quarter came in at $2.3 billion, up from $1.6 billion during the same period last year.
In addition to The Home Depot, Inc. (NYSE:HD), Merck & Co., Inc. (NYSE:MRK), and The Procter & Gamble Company (NYSE:PG), GM is one of the best value stocks from the large-cap space.
According to Insider Monkey's database, 73 hedge funds disclosed long positions in General Motors Company (NYSE:GM), worth roughly $4 billion in the latest round of 13F filings.
