Forecast: Top Value Stocks Expected to Outperform Until 2030

Forecast: Top Value Stocks Expected to Outperform Until 2030

Many investors have relegated value stocks to the scrap heap in the new bull market. This isn’t surprising given the eye-popping gains generated by several large-cap growth stocks.

However, value stocks generally beat growth stocks over the long term. And some value stocks will gain more than others. I predict these stocks could be the best performers through 2030.

1. Alibaba Group

Most investors would probably consider Alibaba Group (NYSE:BABA) as a growth stock. After all, the company is a technology giant that focuses on exciting areas such as e-commerce, cloud services and artificial intelligence (AI). But there’s a strong case that Alibaba is also a value stock.

Alibaba shares have plunged nearly 60% below the highs reached in late 2020. The struggling stock now trades at just 8.3 times forward earnings. This is definitely valuable territory, in my opinion.

What is the main reason for Alibaba’s dismal performance and very cheap valuation? The Chinese economy is slowing down. The once-fast-growing company saw revenue rise just 5% year-over-year in the fourth quarter of 2023, with adjusted profit down 2%.

Don’t count out Alibaba, though. The company invests in initiatives to drive growth. AI is expected to be a major driver for its cloud platform.

I’m not the only one who is optimistic about Alibaba. Of the 48 analysts surveyed by LSEG in March who cover the stock, all but one recommended it as a buy or strong buy.

2. Enterprise Product Partners

Enterprise Product Partners (NYSE:EPD) multiple of forecast profits is less than 10.6x. This is a good deal compared to the valuations of the S&P500 and the energy sector as a whole.

I think Enterprise Products Partners has a key advantage that could help make it a big winner over the next six years. The distribution efficiency of the intermediate energy supplier exceeds 7.1%. Enterprise won’t need huge unit price appreciation (limited partnerships like Enterprise have units instead of shares) to generate exceptional total returns.

Solid price appreciation could be in store for Enterprise, however. Demand for the company’s pipelines and other midstream assets is likely to increase in coming years, especially if an oil supply shortage occurs in late 2025, as Western predicts CEO Vicki Hollub.

Even though the oil and gas industry is going through tough times, Enterprise Products Partners should be in good shape. The company has a long history of generating high returns on invested capital, regardless of fluctuations in commodity prices.

3. Pfizer

Pfizer (NYSE:PFE) is in the same boat as Enterprise Products Partners in a sense. The pharmaceutical maker doesn’t need to achieve significant share price increases to generate market-beating total returns thanks to its dividend yield of more than 5.9%.

This big pharma stock isn’t as cheap as Alibaba and Enterprise based on forward earnings multiples. However, Pfizer is a bargain compared to many of its peers. I also think the current negative sentiment towards the stock is way overblown.

Of course, Pfizer faces some challenges. Its COVID-19-related sales continue to fall. Several of the company’s best-selling products will lose patent exclusivity in the coming years, including blood thinner Eliquis, breast cancer drug Ibrance and rare disease drug Vyndaqel.

This doesn’t tell the whole story, however. Pfizer has several new drugs and new indications for existing drugs that are expected to generate enough annual revenue by 2030 to more than offset losses from patent expirations. The company also projects additional new annual revenue of $25 billion by 2030 through business development deals.

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Keith Speights holds positions at Enterprise Products Partners and Pfizer. The Motley Fool holds positions at and recommends Pfizer. The Motley Fool recommends Alibaba Group, Enterprise Products Partners and Occidental Petroleum. The Motley Fool has a disclosure policy.

Prediction: These stocks could be the best performers until 2030 was originally published by The Motley Fool

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