Value stocks in the S&P 500 are perking up. And investors are moving fast to buy some up while they're still cheap.
Eleven stocks in the S&P 500 Pure Value index — including utility NRG Energy, energy firm Valero Energy and consumer staples firm Kroger — have jumped 20% or more so far this year. Those gains easily top the S&P 500's 9.3% gain and the 12.3% rise of the SPDR Portfolio S&P 500 Growth ETF. What's amazing is that these are the cheapest stocks in the S&P 500 — totally opposite the pricey megacap growth stocks that have been leading for so long.
Value stocks are starting to perk up following years of lagging. "Mixed messages on labor conditions and inflation are confounding market participants and causing bifurcated action across equities and fixed income," said Jose Torres, senior economist at Interactive Brokers.
S&P 500 Value Is Perking Up
You'd be forgiven if you've written off value stocks. They've performed so poorly for so long, some investors think they'll never come back.
But a funny thing happened in March. Value stocks in the S&P 500 rallied. The SPDR Portfolio S&P Value ETF is up 2.6% since March. That edges out the S&P 500's 2.2% rise in that time. And it also tops the 1.8% rise of the SPDR Portfolio S&P 500 Growth ETF.
Granted, it's not huge outperformance. And value stocks still lag for the year so far. But there's no shortage of value stocks doing even better than the index indicates.
Value Stocks Pulling Ahead
When it comes to a value stock that's on fire, it's hard to ignore NRG Energy. Shares of the Houston-based utility firm are up more than 39% this year.
It's the top performer in the S&P 500 Pure Value index this year. The shares trades for just 11 times normalized earnings in the next 12 months. Compare that to the nosebleed valuation of growth stock darling Nvidia, which trades for 106 times earnings in the last 12 months.
And yet, NRG only yields 2.4%, which isn't the fat dividend many value investors look for. Investors, though, are looking for stability. The company's profit is seen rising 6.5% this year and 13.8% in 2025.
Other S&P 500 Value Winners
Powered by rising oil prices, several energy stocks are turning on the jets.
Valero Energy is up nearly 39% this year. It's not a profit growth story. The company's adjusted profit per share is seen falling more than 30% this year and 18% in 2025. But it's a story of things perhaps not being as bad as feared.
The United States Oil Fund ETF, a proxy for oil prices, is up roughly 20% this year. Valero stock also yields 2.4%, paying investors to wait for an improvement in the business. Another stability play is grocer Kroger. Shares are up more than 26% this year. Analysts think the company's profit will skid nearly 7% this fiscal year, but rebound nearly 3% next fiscal year.
There's no question, value stocks have disappointed before. But some of the rallies in select value stocks show some rare bullishness that's been years in the making.
Top Value Stocks
Outperformers this year in S&P Pure Value Index
| Company | Ticker | YTD % ch. | Sector |
|---|---|---|---|
| NRG Energy | 39.3% | Utilities | |
| Valero Energy | 38.7% | Energy | |
| Phillips 66 | 29.7% | Energy | |
| Hartford Financial Services Group | 27.0% | Financials | |
| Kroger | 26.4% | Consumer Staples | |
| General Motors | 25.8% | Consumer Discretionary | |
| Allstate | 23.9% | Financials | |
| Target | 23.2% | Consumer Staples | |
| Mohawk Industries | 22.1% | Consumer Discretionary | |
| Cigna | 20.6% | Health Care | |
| Travelers | 20.2% | Financials |
