As the U.S. Federal Reserve continues to cut interest rates, investors are weighing the potential impact on both growth and value stocks. Historically, lower borrowing costs have been a catalyst for growth stocks, which tend to benefit from a more capital-friendly environment. Tech stocks and small caps, in particular, have had a strong run, with the S&P 500 up 24% year-to-date.
However, not everyone is convinced that growth is the way to go. Some analysts, like BofA Securities’ Savita Subramanian, argue that value stocks could be entering a long cycle of outperformance. With profits accelerating alongside rate cuts—a rare combination—there’s a growing belief that value stocks, which are often underappreciated in rising markets, could shine in the coming months.
As we navigate this shifting landscape, our latest stock watchlist highlights companies from the value category that are worth your attention right now. Whether you’re leaning toward value plays or sticking with growth, these picks have the potential to benefit from current market dynamics.
Carlisle Companies (NYSE: CSL) – A Value Opportunity in the Making
Shares of Carlisle Companies have pulled back following a weaker-than-expected third-quarter earnings report. The revenue miss and decline in organic sales disappointed investors, with management pointing to challenges such as soft residential markets, port strikes, and unfavorable weather conditions. While these issues have put pressure on the stock, it may present a compelling opportunity for value-focused investors.
Despite the recent dip, Carlisle is up 36.1% year-to-date and, at its current price of $421.09, is trading 12.4% below its 52-week high. For value investors, this kind of pullback in a high-quality company can signal a potential buying opportunity. Carlisle’s strong position in the commercial construction space, coupled with its diversified business model, makes it well-positioned to weather short-term challenges.
Market overreactions often provide a chance to buy solid companies at a discount, and Carlisle is no exception. For investors looking to add a value play to their portfolio, CSL offers a strong long-term outlook and could represent a great opportunity at its current price.
Hewlett Packard Enterprise (NYSE: HPE) – A Strong Value Play
Hewlett Packard Enterprise (HPE) stands out as a great pick for value investors, especially given its impressive fundamentals and solid earnings outlook. Currently, HPE boasts a Zacks Rank of #2 (Buy), which reflects recent positive revisions to its earnings estimates—a key indicator that the company’s future earnings potential is on the rise. This improving outlook, combined with HPE’s attractive valuation metrics, makes it a compelling choice for value-focused portfolios.
At the heart of HPE’s value case is its forward P/E ratio of 10.73, well below the sector average, indicating that the stock is trading at a reasonable price relative to its earnings potential. Additionally, HPE has a P/B ratio of 1.23, which suggests the stock is undervalued compared to its book value. For investors looking at growth alongside value, HPE’s PEG ratio of 3.40 adds another layer of attraction, as it factors in expected earnings growth at a reasonable price.
HPE demonstrates the key traits value investors seek: strong fundamentals, a low valuation, and an improving earnings outlook. If you’re looking for a stock that offers both stability and value, HPE should definitely be on your radar.
Alibaba (NYSE: BABA) – An Undervalued Powerhouse with Strong Growth Potential
Alibaba (BABA) is currently catching the attention of value investors, and for good reason. With a forward P/E ratio of 10.51, well below its industry average of 24.69, Alibaba looks undervalued given its impressive growth potential. Over the past year, the stock’s P/E has ranged between 7.73 and 13.49, showing that at its current level, it’s trading closer to the lower end of that range, which could present an attractive entry point.
BABA’s PEG ratio of 0.40 adds another layer of value, taking into account the company’s earnings growth rate, which outpaces its industry’s average PEG of 1.06. This suggests that Alibaba is not only undervalued in terms of its price but also considering its future growth potential. Over the past year, the company’s revenue and income from operations have steadily increased, and analysts expect further growth in the coming quarters, with revenue projected to increase by 8.9% year-over-year in Q3.
In addition to its core business, Alibaba has been expanding into innovative segments. Recent partnerships with Mastercard and Cardless for a co-branded credit card and the launch of AI-powered sourcing solutions are just two examples of how the company continues to diversify and enhance its offerings. These initiatives, aimed at empowering small businesses, are expected to drive future growth and strengthen Alibaba’s position in the global marketplace.
With shares up 30.8% over the past six months and 20.2% over the past year, BABA is showing both momentum and value. At its current price, Alibaba offers a strong combination of growth and value, making it an attractive pick for investors looking for a long-term play.
