If there is one thing that every investor wants to find, it's value. The basic definition of a value stock is one whose stock price is trading lower than its fundamentals, and as a result is considered to be under-priced.
The basic idea behind investing in value stocks is that we believe the share price will increase. We are not worried about finding stocks that are growing earnings, or increasing their dividend payments each year… we are simply trying to spot companies whose stock prices will move higher.
Because we want to see stock-price appreciation, we often tend to shy away from stocks trading near their 52-week highs out of fear that we have already missed the boat. Sometimes that is correct, but in many cases the stock is trading high because of strong investor confidence in future gains. Let's take a look at four companies that we believe will continue to show strength and offer value to investors.
Kroger (KR) operates as a retail grocery chain in the United States. The company currently has an annual dividend yield of 2.2%. Taking a quick look at the company's stock chart, you will note that it is trading near its 52-week high. With a P/E of just 12.3, we believe there is still more upside to the stock. Kroger is one of the largest grocers in the nation with over 2,400 supermarkets, and is in the midst of a major push to increase its number of stores. The company has outpaced analyst estimates for each of the last five quarters, and recently lifted its full-year earnings and sales guidance for 2013.
Chart courtesy stockcharts.com