Last year, when the broad decline for the stock market was led by technology companies, value stocks held up relatively well. So far in 2023, tech has been on a tear, but with interest rates still rising and other factors — including a banking crisis and now an oil-supply jolt — keeping investors jittery, this may still be a good time to think about value stocks. Below is a screen of the Russell 1000 Value Index
RLV,
+0.51%,
narrowing the group of companies to 10 that analysts expect to put up big growth numbers over the next two years. Some of these may run counter to what you expect to see in a “value” index, but the list can be useful for your own investment research.
First, take a look at this chart for several broad indexes from the end of 2021:
The Russell 1000 index has held up best among these four broad indexes since the end of 2021.
FactSet
The Russell 1000 index
RUI,
+0.30%
is designed to capture the performance of the largest 1,000 U.S. stocks, representing about 93% of the domestic equity market. The Russell 1000 Value Index is a subset of the Russell 1000, made up of 851 companies “with relatively lower price-to-book ratios,” lower forecasts for growth and “lower sales per share historical growth (5 years),” according to FTSE Russell. Descriptions and factsheets for the Russell indexes are available here. One interesting aspect of such a large group in the value camp is that some of the companies are expected to put up solid growth numbers over the next two years. Last week we screened the S&P 500
SPX,
+0.37%
to narrow that group of stocks to an “exclusive growth club” of 11 companies. Applying the same screen of expected growth rates for sales, earnings and free cash flow to the Russell 1000 Value Index yields a new list of 10 companies. Here’s how we ran the screen:
There are 851 stocks held by the iShares Russell 1000 Value ETF
IWD,
+0.55%.
817 of the companies are covered by at least five analysts polled by FactSet.
We removed any company for which consensus estimates for earnings per share or free cash flow were unavailable or negative for 2022, 2023 or 2024. We used calendar-year estimates for a uniform set of data, because many companies have fiscal years that don’t match the annual calendar or even calendar month-ends. This narrowed the list to 388 companies.
Then we narrowed further to the 10 companies for which the estimates predict compound annual growth rates (CAGR) of at least 15% (rounded) for sales, …