Michael Brush: Three value-stock investors favor these six picks for a rocky 2023

by | Jan 4, 2023 | Stock Market

Analysts expect value stocks to maintain outperformance over growth stocks as interest rates rise and the economy falters. To find some of the best value names to consider, I recently checked in with three value-oriented stock-letter writers who have solid long-term records, according to Hulbert Financial Digest. Here are six names they favor, and I also share their market outlooks for 2023.

John Buckingham, The Prudent Speculator Market and economic outlook: We will have a mild recession in 2023. But that doesn’t mean stocks and corporate profits will take a big hit. Stocks will hold up because an economic contraction is already discounted. “The idea that we have not priced in a recession is a bunch of hooey,” says Buckingham. As for corporate earnings, even in a recession we will still have positive nominal GDP growth (before adjusting for inflation). This will support reported earnings. “Profits will not decline significantly,” says Buckingham. Since a big decline in profits is priced in, this will be an upside surprise. If the economy slows significantly, the Federal Reserve may have to cut rates, which could provide a tailwind for stocks. Bears push back on his thesis by arguing that “something will break.” They believe rising rates will create systemic stress that takes out a financial playe …

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