10 value stocks expected to act like growth stocks through 2024

By Philip van Doorn

These companies are expected to put up vastly improved numbers for sales, earnings and cash flow over the next two years

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 , 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 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 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:

Here they are, sorted by expected sales CAGR from 2022 through 2024:

Company                              Ticker  Two-year estimated sales CAGR through 2024  Two-year estimated EPS CAGR through 2024  Two-year estimated sales FCF through 2024 
Snowflake Inc. Class A                SNOW                                        39.6%                                     93.6%                                      50.0% 
Bill Holdings Inc.                    BILL                                        31.0%                                     97.6%                                     147.0% 
Albemarle Corporation                 ALB                                         28.4%                                     14.1%                                      46.4% 
Take-Two Interactive Software Inc.    TTWO                                        25.0%                                     37.8%                                     116.8% 
DoubleVerify Holdings Inc.             DV                                         23.2%                                     20.2%                                      39.7% 
Jamf Holding Corp                     JAMF                                        18.1%                                     52.3%                                      23.7% 
Ceridian HCM Holding Inc.             CDAY                                        17.8%                                     42.3%                                     134.5% 
EQT Corporation                       EQT                                         16.8%                                     30.8%                                      35.8% 
Definitive Healthcare Corp. Class A    DH                                         16.0%                                     14.4%                                      61.6% 
Block Inc. Class A                     SQ                                         14.6%                                     55.1%                                    1865.6% 
                                                                                                                                                             Source: FactSet 

Click on the tickers for more about each bank, including news coverage, financials and analysts' opinions.

Read Tomi Kilgore's detailed guide to the wealth of information available for free on the MarketWatch quote page.

It might surprise you to see some "growthier" names on this list, including TakeTwo Interactive Software Inc. (TTWO) and Block Inc. (SQ).

For Take Two, video game life cycles or COVD-19 may have played a role, as the company experienced sales growth of only 4% in 2021. Sales rose 42% in 2022. Nobody knows when the company's subsidiary RockStar Games will release Grand Theft Auto 6, but that development is expected by analysts to cause a spike in sales at some point. GTA 5 was released in 2013.

Block is up 9% this year, despite taking a tumble last month after Hindenburg Research, a short seller, accused the mobile payments processor of "reporting inflated user metrics." As you can see below, most analysts working for brokerage firms are still confident in Block.

Here's a summary of analysts' opinions about these stocks. They are listed in the same order as above, and forward price-to-earnings ratios are included. Many of these are high, relative to the forward P/E of 14.1 for the iShares Russell 1000 Value ETF and 18.2 for the S&P 500. But there are many factors that go into FTSE Russell's placement of stocks in the Russell 1000 Value Index.

Company                              Ticker  Forward P/E  Share "buy" ratings  March 31 closing price  Consensus price target  Implied 12-month upside potential 
Snowflake Inc. Class A                SNOW        227.03                  61%                 $154.29                 $178.95                                16% 
Bill Holdings Inc.                    BILL         65.93                  71%                  $81.14                 $127.07                                57% 
Albemarle Corporation                 ALB           7.67                  57%                 $221.04                 $316.96                                43% 
Take-Two Interactive Software Inc.    TTWO         22.24                  78%                 $119.30                 $132.63                                11% 
DoubleVerify Holdings Inc.             DV          44.66                  93%                  $30.15                  $34.92                                16% 
Jamf Holding Corp                     JAMF         72.74                  80%                  $19.42                  $27.22                                40% 
Ceridian HCM Holding Inc.             CDAY         55.26                  47%                  $73.22                  $84.07                                15% 
EQT Corporation                       EQT           8.05                  79%                  $31.91                  $46.86                                47% 
Definitive Healthcare Corp. Class A    DH          50.58                  46%                  $10.33                  $14.50                                40% 
Block Inc. Class A                     SQ          35.38                  75%                  $68.65                  $96.34                                40% 
                                                                                                                                                 Source: FactSet 

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-Philip van Doorn

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04-08-23 0909ET

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