In this article, we discuss top 15 value stocks to buy for 2024 picked by Joel Greenblatt. To skip the details about Mr. Greenblatt’s life, portfolio performance, and investment strategy, go directly toTop 5 Value Stocks to Buy for 2024.
Investing offers an exciting and effective way of growing wealth over time. Value investing is one of the popular strategies that professional investors have leveraged with great success to squeeze optimum returns in the investment world. It is a strategy that entails focusing on the most undervalued stocks and opening positions when they are about to rally.
In value investing, the focus is always on stocks of companies trading below their intrinsic value. This means concentrating on stocks whose share price is much lower than their worth. Such stocks often become winners whenever the overall market realizes their value and starts piling in.
Joel Greenblatt is one of the most revered value investors who has perfected the art of analysing the market and coming up with stocks trading below their intrinsic value. He shot to prominence in 1985 when he established Gotham Capital, a venture capital firm that generated 50% in annualized returns between 1985 and 1994.
In 2008, the legendary investor founded Gotham Asset Management, a hedge fund that created a unique way of identifying value stocks with growth potential. Magic Formal is the systematic mythology that analyses two financial metrics to ascertain whether a stock trades below its intrinsic value.
The methodology entails ranking stocks based on their earnings yield and return on capital. By analysing the two key metrics, it becomes much easier to identify companies whose earnings are growing relative to their share price. In most cases, companies whose earnings are growing much faster than share price are often considered gems that could explode in the near future.
In addition, if a company is churning out a high return on capital and re-investing the amount to expand the business, there is always a high chance of earnings growing much faster. Therefore, the top value stocks to buy for 2024 picked by Joel Greenblatt are those with high capital and earnings yield returns as part of any value investing strategy.
While value investing promises significant returns, everything boils down to the holding period of the stocks. It is highly unlikely that undervalued stocks will explode overnight and generate blockbuster returns once. Therefore, the legendary investor calls for patience regarding the holding period of value stocks.
Top 15 Value Stocks to Buy for 2024 (Picked by Joel Greenblatt)
Joel Greenblatt of Gotham Asset Management
"Most people just won't wait that long. Their investment time horizon is too short. If a strategy works in the long run (meaning it sometimes takes three, four, or even five years to show its stuff), most people won't stick with it. After a year or two of performing worse than the market averages (or earning lower returns than their friends), most people look for a new strategy— usually one that has done well over the past few years," Greenblatt said.
Heading into 2024, valuation levels have run out of proportion after a blockbuster rally for the better part of the year. Most stocks appear overvalued after the Nasdaq 100 rallied by about 38% and the S&P 500 gained 21%. While the likes of NVIDIA Corporation (NASDAQ:NVDA), Apple Inc. (NASDAQ:AAPL), and Alphabet Inc (NASDAQ:GOOG) appear to be trading at premium valuations after double-digit percentage gains, there are gems still trading at discounted valuations.
Gotham Asset Management's portfolio value rose to over $4.84 billion in Q3 2023, up from $4.60billion in the previous quarter. The fund follows a varied investment approach, with stakes in technology, services, healthcare, and finance sectors. Some of Greenblatt's top holdings in Q3 were Alphabet Inc (NASDAQ:GOOG), Microsoft Corporation (NASDAQ:MSFT), and Apple Inc. (NASDAQ:AAPL).
The price-to-earnings (P/E) ratio shows how a stock's price compares to its earnings. It helps find cheap stocks with high growth potential. A low P/E means the stock is a bargain, and the company is doing well. A high P/E implies the stock is pricey and the market expects high growth. Value investors seek stocks with low P/E ratios compared to the market or sector. This article will explore Joel Greenblatt's Best Value Stocks to Buy for 2024.
Our Methodology
With valuations appearing overstretched in the equity markets, value investing promises to be a key investment strategy in 2024. After analyzing Gotham Assets Management 13F fillings, we have compiled a list of the top value stocks to buy for 2024, picked by Joel Greenblatt. We have ranked the stocks chronologically based on the underlying price-to-earnings multiple. Additionally, we've provided insights into hedge fund sentiment for each stock. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
General Mills, Inc. (NYSE:GIS) is a consumer defensive play in the Gotham Assets Management portfolio, specializing in manufacturing and marketing branded consumer foods worldwide.
The packaged goods stock has pulled back by about 22% year to date, making it one of the top-value stocks to buy for 2024, picked by Joel Greenblatt, given the depressed valuation. General Mills, Inc. (NYSE:GIS) trades with a price-to-earnings multiple of 14.47 compared to 24 for the S&P 500 while offering a 3.68% yield. Gotham Assets Management increased its stake in General Mills, Inc. (NYSE:GIS) by 96% in Q3 to $13.4 million.
At the end of Q3 2023, General Mills, Inc. (NYSE:GIS) attracted investments from 39 hedge fund investors, according to the Insider Monkey database. Millennium Management emerged as the top shareholder of General Mills, Inc. (NYSE:GIS), holding around 1.6 million shares valued at approximately $102.8 million.
Johnson & Johnson (NYSE:JNJ) is one of the best value stocks to buy for 2024, picked by Joel Greenblatt for investors eyeing exposure in the healthcare sector. Johnson & Johnson (NYSE:JNJ) has carved a niche in developing, manufacturing, and selling various products in the healthcare sector.
After going down by about 12% for the year, Johnson & Johnson (NYSE:JNJ) is trading at a discount, going by its P/E of 14.47, which is way below the S&P 500 average of 24. Gotham Assets Management increased its holdings in Johnson & Johnson (NYSE:JNJ) by 9% in Q3 2023 to $19.47 million.
During the third quarter of 2023, the count of hedge funds monitored by Insider Monkey holding positions in Johnson & Johnson (NYSE: JNJ) decreased to 84, down from 88 in the previous quarter. The combined investments from these hedge funds exceeded a total value of $4.15 billion. A prominent hedge fund investor in Johnson & Johnson (NYSE:JNJ) is Fisher Asset Management, overseen by Ken Fisher, holding a significant stake valued at approximately $1.17 billion.
In its Q3 2023 investor letter, ClearBridge Large Cap Value Strategy provided the following insight on Johnson & Johnson (NYSE:JNJ):
“The health care space provided some opportunities in the quarter, as we increased our exposure to medical device company Becton, Dickinson as well as large cap pharmaceutical company Johnson & Johnson (NYSE:JNJ). Johnson & Johnson recently spun out its consumer health care business, becoming a more focused yet broadly diversified pharmaceutical and medtech company.”
Caterpillar Inc. (NYSE:CAT) is one of the top value stocks to buy for 2024, picked by Joel Greenblatt for anyone eyeing exposure in the industrial sector benefiting from a booming global economy. Caterpillar Inc. (NYSE:CAT) manufactures and sells construction and mining equipment in various sectors, from mining to construction work.
While Caterpillar Inc. (NYSE:CAT) has gained 21% year to date, it trades at a discount. It trades with a price-to-earnings multiple of 14.12, much lower than the S&P 500 average of 24. Gotham Asset Management increased stakes in Caterpillar Inc. (NYSE:CAT) by 27% in Q3 2023 to $22.62 million.
At the conclusion of the third quarter in 2023, data from Insider Monkey's database indicated that 50 hedge funds held positions in Caterpillar Inc. (NYSE: CAT), with a sustained value of $4.8 billion. This mirrored the valuation of holdings from the preceding quarter, which stood at $2.5 billion.
In its Q3 2023 investor letter, asset management firm Diamond Hill Capital highlighted Caterpillar Inc. (NYSE:CAT) among its featured stocks, offering the following insights:
“Caterpillar Inc. (NYSE:CAT), the world’s leading manufacturer of construction and mining equipment, also performed well this quarter. Caterpillar has managed to leverage increased capital investment from various end markets, contributing to better than expected fiscal results for Q2. The company is poised to be one of the largest beneficiaries of several government funding initiatives, including the IRA (Inflation Reduction Act) bill, CHIPS Act and infrastructure bill. These measures are expected to support construction spending for several years, providing a robust backdrop for Caterpillar’s continued growth.”
Headquartered in Illinois Chicago, AbbVie Inc. (NYSE:ABBV) is a healthcare investment play that discovers, develops, manufactures, and sells pharmaceutical products. AbbVie Inc. (NYSE:ABBV) is primarily known for Humira, its flagship product used as an injectable treatment for autoimmune intestinal Behçet's diseases. The company also offers Skyrizi to treat moderate to severe plaque psoriasis.
A 4% pullback year to date affirms AbbVie Inc. (NYSE:ABBV) as the top value stocks to buy for 2024, picked by Joel Greenblatt. The stock trades at a discounted valuation with a P/E of 13.76 while offering a 4.06% dividend yield. Greenblatt's hedge fund increased its holdings in the company by 35% in Q3 2023 to $10.97 million.
As of Q3 2023, AbbVie Inc. (NYSE:ABBV) shares were held by 73 out of 910 hedge funds tracked by Insider Monkey with a total value of $3.27 billion.
General Motors Corp (NYSE:GM) is an industrial investment player in the Greenblatt portfolio that operates as a high-tech industrial company. General Motors Corp (NYSE:GM) manufactures and sells gas and steam turbines and data-leveraging software for power generation.
General Motors Corp (NYSE:GM) has benefited from a booming global economy by growing industrial activities. The stock is up by about 89% year to date while still trading at a price-to-earnings multiple of 13.21 and paying a 0.25% dividend yield. Gotham Asset Management trimmed its holdings in General Motors Corp (NYSE:GM) by 1% in Q3 2023 to $9.28 million.
General Motors Corp (NYSE:GM) is a sought-after automotive stock among leading hedge funds monitored by Insider Monkey. A total of 66 hedge funds, as tracked by Insider Monkey, held positions in General Motors Corp (NYSE:GM).
Here is what Diamond Hill Large Cap Strategy said about General Motors Company (NYSE:GM) in its Q3 2023 investor letter:
“Several of our bottom contributors were in the consumer area, including auto retailer CarMax and auto manufacturer General Motors Company (NYSE:GM). In general, rising interest rates have priced out a large portion of the population who simply can’t afford to buy a car given where financing costs stand today. These challenges have weighed on both companies. General Motors was also impacted by the UAW strike, which put a damper on the automotive industry in general.”
Bristol Myers Squibb Company (NYSE:BMY) is a healthcare value investment play specializing in discovering, licensing, manufacturing, and selling biopharmaceutical products. Bristol Myers Squibb Company (NYSE:BMY) produces treatment options for hematology, oncology, cardiovascular, immunology, fibrotic, and neuroscience diseases.
Bristol Myers Squibb Company (NYSE:BMY) has started bouncing back after coming under pressure and going down by about 26% in 2023. It trades at a price-to-earnings multiple of 13.01 compared to 24 for the S&P 500 while offering a 4.68% dividend yield. Gotham Assets Management increased its stake in Bristol Myers Squibb Company (NYSE:BMY) by 34% in Q3 2023 to $12.04 million.
As of the end of the third quarter of 2023, 65 hedge funds reported owning stakes in Bristol Myers Squibb Company (NYSE:BMY), down from 66 in the preceding quarter.
The J. M. Smucker Company (NYSE:SJM) is a consumer defensive company that manufactures and markets branded food and beverage products. The J. M. Smucker Company (NYSE:SJM) offers mainstream roast, ground, single-serve, and premium coffee, peanut butter and speciality spreads, fruit spreads, toppings, and syrups.
While The J. M. Smucker Company (NYSE:SJM) has underperformed in 2023, going down by about 22%, it remains a value investment play after the deep pullback. The J. M. Smucker Company (NYSE:SJM) trades at a price-to-earnings multiple of 12.92 while offering a 3.43% dividend yield. Greenblatt hedge fund increased its stakes in the company by 35% in Q3 2023 to $13.92 million.
In Q3 2023, the count of hedge funds in Insider Monkey's database holding positions in The J. M. Smucker Company (NYSE:SJM) increased to 33, up from 29 in the previous quarter. The total value of these holdings is close to $460 million.
Cisco Systems, Inc. (NASDAQ:CSCO) is a technology company that manufactures and sells Internet Protocol-based networking and other related solutions for the communication and information technology industry. Cisco Systems, Inc. (NASDAQ:CSCO) has lagged behind the overall technology industry, going by a 5% gain compared to a 38% gain for the Nasdaq 100.
Amid the underperformance, Cisco Systems, Inc. (NASDAQ:CSCO) remains one of the value stocks to buy for 2024, picked by Joel Greenblatt. The stock is trading at a significant discount with a P/E of 12.80 compared to the average P/E for the tech-heavy Nasdaq Index. Greenblatt hedge fund took advantage of a significant pullback in Q3 2023 to bolster stakes in Cisco Systems, Inc. (NASDAQ:CSCO) by 11% to $21.62 million.
In Q3 2023, the count of hedge funds monitored by Insider Monkey holding positions in Cisco Systems, Inc. (NASDAQ:CSCO) increased to 64, up from 55 in the previous quarter. The total value of these holdings exceeded $1.6 billion.
In its Q3 2023 investor letter, Oakmark Fund anticipates that Cisco Systems, Inc. (NASDAQ:CSCO)'s evolving business model will drive accelerated revenue growth. Here is what it said:
“Cisco Systems, Inc. (NASDAQ:CSCO) is the leading networking solutions company. Networking equipment becomes more important as businesses modernize their IT infrastructure, and Cisco is well positioned to capture this demand given its broad portfolio and highly effective go-to-market strategy. Cisco is transitioning away from selling mainly transactional hardware and toward selling more software and subscriptions. This shift is expected to accelerate revenue growth, improve operating margins and build recurring revenue. Despite these notable business improvements, Cisco still trades near a trough valuation relative to the S&P 500 Index. More recently, Cisco announced its intention to acquire Splunk, a leader in security and observability, adding to its already strong position in the increasingly important security market. At a low-teens multiple of our estimate of normalized earnings, Cisco is trading comfortably below our estimate of intrinsic value.”
Comcast Corporation (NASDAQ:CMCSA) is a media and technology company offering residential, broadband, and wireless connectivity services. Comcast Corporation (NASDAQ:CMCSA) also provides video services, advertising sales, and sky channels. The stock has gained about 29% yearly, outperforming the S&P 500.
On the other hand, Comcast Corporation (NASDAQ:CMCSA) trades at a price-to-earnings multiple of 12.26, much lower than 24 for the S&P 500. The disparity could signal undervaluation, making it one of the top value stocks to buy for 2024, picked by Joel Greenblatt. Gotham Assets Management reduced its holdings in Comcast Corporation (NASDAQ:CMCSA) by 2% in Q3 2023 to $15.34 million.
At the close of Q3 2023, Comcast Corporation (NASDAQ:CMCSA) captured the interest of 68 out of the 910 hedge funds monitored by Insider Monkey, up from 66 in the previous quarter. The combined value of these holdings exceeds $3.62 billion.
Exxon Mobil Corporation (NYSE:XOM) is one of the stocks that legendary investor Greenblatt has often turned to for value investing in the energy sector. Exxon Mobil Corporation (NYSE:XOM) is a company that produces oil and gas. Its P/E ratio is 10.49.
In contrast, the S&P 500 trades with a P/E of 24, signaling Exxon Mobil Corporation (NYSE:XOM) may be trading below its intrinsic value. The stock has underperformed in 2023, going down by about 8% compared to a 21% gain for the S&P 500. On the other hand, Gotham Asset Management held stakes worth $20.26 million as of the end of Q3 2023.
In Q3 2023, Insider Monkey's database indicated that 79 hedge funds held stakes in Exxon Mobil Corporation (NYSE:XOM), an increase from 71 in the preceding quarter. The combined value of these stakes reached nearly $4.5 billion.
