Chances are that building your shortlist of the best value stocks has moved up on your priority list, as the market backdrop for growth stocks continues to deteriorate.
The past week brought a slew of bad data for equities. US economic growth has slid close to a two-year low, while underlying inflation advanced more than forecast. The “no rate cut” scenario for 2024 is looking increasingly likely. Just a couple of months ago, investors had priced in as many as three rate cuts for this year.
When value stocks become more attractive than growth stocks
Value stocks typically become more attractive relative to growth stocks during periods of declining economic growth and high interest rates for several reasons:
Stability and Predictability
By representing mature companies with steady revenue streams, value stocks offer greater stability and predictability compared to growth stocks, which are more volatile in nature. During economic downturns, investors tend to prefer the safety of firms with reliable dividends and strong fundamentals.
Less Sensitivity to Interest Rate Increases
Value stocks typically have manageable levels of debt and consistent earnings, making them less sensitive to interest rate hikes. High interest rates can disproportionately affect growth stocks, as their future cash flows become less valuable when discounted at higher rates.
Dividend Yields
Contrary to growth stocks, value stocks often pay dividends. . In times of economic uncertainty, this tangible return on investment can be especially appealing as they offer a return even when market prices are volatile.
Valuation
During periods of economic slowdown, the market tends to shift focus from the potential for future growth (which favors growth stocks) to current valuations relative to earnings.
Screening for value stocks in Ziggma’s free stock screener
To single out the best value stocks, we used Ziggma’s free stock screener to find companies that are:
✅ Inexpensive
✅ Growing
✅ Profitable
Our top 5 value stocks right now
Based on current prices and fundamentals, we selected the following five stocks for our shortlist of the top 5 value stocks right now.
Cisco Systems.
CSCO 📈
Ziggma Score: 100
2025 Price/Earnings: 12.8x
2025 Revenue Growth: 3%
Return on Assets: 13%
Cisco Systems, headquartered in San Jose, California, designs, manufactures, and sells Internet Protocol based networking and other products. It provides infrastructure platforms, including networking technologies of switching, routing, wireless, and data center products that are designed to work together to deliver networking capabilities, and transport and/or store data.
Why is CSCO attractive?
The market projects Cisco’s earnings to grow by 22% between 2023 and 2025. This rate of growth should warrant a Price/Earnings ratio in excess of the current 12.8x based on 2025 earnings.
D.R. Horton.
DHI 📈
Ziggma Score: 99
2025 Price/Earnings: 9.4x
2025 Revenue Growth: 7%
Return on Assets: 15%
D.R. Horton, headquartered in Arlington, Texas, is a homebuilding company. It engages in the acquisition and development of land as well as the construction and sale of residential homes in 31 states and 98 markets under the names of D.R. Horton, America’s Builder, Express Homes, Emerald Homes, and Freedom Homes. The company constructs and sells single-family detached homes; and attached homes, such as town homes, duplexes, and triplexes.
Why is DHI attractive?
We like DHI for its strong track record when it comes to consistently grow sales. While focusing on value is crucial in investing, there rarely is share price apprecation absent a positive growth trajectory in sales and earnings.
Paypal.
PYPL 📈
Ziggma Score: 75
2025 Price/Earnings: 11.4x
2025 Revenue Growth: 8%
Return on Assets: 5%
PayPal, which is headquartered in San Jose, California, operates a technology platform that enables digital payments on behalf of merchants and consumers worldwide. It provides payment solutions under the PayPal, PayPal Credit, Braintree, Venmo, Xoom, Zettle, Hyperwallet, Honey, and Paidy names. The company’s payments platform allows consumers to send and receive payments in approximately 200 markets and in approximately 100 currencies.
Why is PYPL attractive?
At 2.5x Price to Sales, Paypal stock has never been cheaper. The company has literally gone from being priced as a growth stock to a value stock.
Enterprise Product Partners.
EPD 📈
Ziggma Score: 91
2025 Price/Earnings: 10x
2025 Revenue Growth: 4%
Return on Assets: 8%
Enterprise Products Partners, which is headquartered in Houston, Texas, provides midstream energy services to producers and consumers of natural gas, natural gas liquids (NGLs), crude oil, petrochemicals, and refined products. It operates 19 natural gas processing facilities located in Colorado, Louisiana, Mississippi, New Mexico, Texas, and Wyoming.
Why is EPD attractive?
On top of consistent price appreciation of its stock over the past few years, EPD delivers a very attractive 6.9% dividend yield for its shareholders.
Gilead.
GILD 📈
Ziggma Score: 99
2025 Price/Earnings: 11.2x
2025 Revenue Growth: 2%
Return on Assets: 9%
Gilead is a biopharmaceutical company headquartered in Foster City, California, that develops, and commercializes medicines in the areas of unmet medical need. Gilead’s stock has had a rocky start into the year with a 25% drop due to a few setbacks in clinical trials and financial charges linked to a recent $4bn acquisition
Why is GILD attractive?
Analyst consensus puts the fair share price for Gilead stock at $84.09. This suggests 29% upside from the current stock price level. Furthermore, return on assets is projected to increase by 67% between 2023 and 2025. If this increase comes to materialize, Gilead’s stock should command a much higher valuation multiple.
Disclosure
Ziggma team members presently hold shares in some of the stocks mentioned in this article.
This article is not investment advice. We cannot predict whether these stocks will go up or down. Our analysis is centered entirely on publicly available information. Please do your own homework prior to making an investment decision.