3 value stocks that will make you richer in the second half of 2021 (and beyond)

For more than a decade, Wall Street and investors have focused their attention on growth stocks. Indeed, historically low lending rates and ongoing quantitative easing measures by the country’s central bank have facilitated access to cheap capital.

But as we emerge from the pandemic recession, it’s important to recognize that value stocks have both:

• Outperforms growth stocks over the very long term (17% average annual return, versus 12.6% for growth stocks), according to a JP Morgan (NYSE: JPM) Asset management report; and
• Remarkably well done during the early stages of economic recovery.

In other words, those who pay attention to stocks priced below the broader market and / or their industry might be ready to make a fortune. As we move into the second half of 2021, the following trio of value stocks have the potential to make investors much richer.

Facebook

Scratch your head a little and wonder how the rapidly growing social media giant Facebook (NASDAQ: FB) is it part of a list focused on value stocks? Believe it or not, Facebook is both growing and share value. Its revenue grows steadily by 20% or more on an annual basis, and the coming-year price-to-earnings ratio of 23 (based on the Wall Street consensus estimate) is almost in line with the index of reference. S&P 500the multiple of the estimated profits for the coming year. In other words, with a price / earnings-growth ratio of around 1, Facebook is a godsend, even near an all-time high.

Facebook’s attractiveness as an investment is based on its complete dominance of the social media space. When the company lifted the veil on its first quarter operating results, it showed that 2.85 billion people visit its namesake site each month, with an additional 600 million unique visitors heading to WhatsApp and Instagram, which Facebook also has. Advertisers are well aware that they will not find a larger social media audience than the 3.45 billion monthly active users (44% of the world’s population) on Facebook. This is what gives the company such exceptional advertising pricing power, even during the pandemic.

Although this is a point that I have noted several times over the years, Facebook has not yet fully depressed the gas pedal. Although on track to generate more than $ 100 billion in ad revenue this year, those ad dollars come almost entirely from its namesake site and Instagram. In other words, WhatsApp and Facebook Messenger are two of the six most visited social sites in the world, but Facebook has yet to start monetizing them significantly.

And we can’t forget Oculus, the company’s virtual reality (VR) device segment. Even though Facebook doesn’t detail specific Oculus sales, first-quarter “Other” revenue climbed 146% to $ 732 million. This jump was almost certainly the result of an increase in Oculus sales. Look for these ancillary projects to cushion Facebook’s impressive growth rate and modestly diversify its revenue channels.

Pharmaceutical Jazz

Biotech stocks aren’t generally known as the perfect place to look for big discounts. Since most biotech companies spend a lot of money researching a successful drug, they are often unprofitable or valued at a huge multiple of future sales or profits. But this is not the case for Ireland Pharmaceutical Jazz (NASDAQ: JAZZ). Even with Jazz approaching an all-time high, investors can buy shares in the company for just over 10 times Wall Street’s BPA consensus for the coming year.

For more than a decade, Jazz has built on the growth of its best-selling drug, Xyrem, which is used to treat specific symptoms associated with narcolepsy. Over the years, Xyrem has enjoyed increased adoption and significant pricing power. It has effectively become a drug capable of generating $ 1.6 billion in annual revenue, or roughly two-thirds of Jazz’s annual sales.

An exciting recent development is Xywav, which is a new generation version of Xyrem that contains 92% less sodium. This reduction in sodium is positive for patients with potential cardiovascular problems. But most importantly, the development of Xywav ensures that Xyrem’s cash flow remains in the Jazz franchise, even when Xyrem’s exclusivity period is over.

Jazz Pharmaceuticals also recently entered into a $ 7.6 billion deal to acquire cannabinoid-based pharmaceutical company GW Pharmaceuticals. GW Pharma’s flagship drug, Epidiolex, is approved for the treatment of two rare forms of childhood epilepsy and Bourneville’s tuberous sclerosis. Epidiolex sales topped $ 500 million in 2020 and may soon reach blockbuster status ($ 1 billion or more in sales per year) if its label grows and organic growth continues.

With a more diversified sales channel and rock-solid profitability, Jazz looks like a biotech stock that could explode.

Ford

A final value stock that can deliver big gains for your portfolio in the second half of 2021, and well beyond, is Ford Motor Company (NYSE: F). Automobiles have historically been valued at lower price-to-earnings ratios than the benchmark S&P 500. However, with the auto replacement cycle pushing electric vehicles (EVs) into garages, Ford’s growth rate at United States and abroad could accelerate dramatically over the years. come. This makes its forward P / E ratio of 8 a good deal.

There are three huge catalysts that should boost Ford’s bottom line. First, as noted, electric vehicles are a decades-long growth trend. In fact, the company recently announced that it would spend at least $ 30 billion by 2025 to launch 30 models of electric vehicles around the world. This is an increase from previous forecasts that the company was on the verge of spending $ 22 billion on electric vehicles by 2023. In June, sales of the company’s all-electric Mustang Mach-E jumped. jumped 27% from May, and it unveiled the all-electric F-. 150 Lightning in mid-May.

The second big catalyst for Ford is China. All eyes may be on the electrification of the US market, but China is the world’s largest auto market. The electric car market is even more nascent in China than in the United States. For Ford, this is an opportunity to leapfrog. Last year, the company increased vehicle sales in China for the first time since 2017, potentially signaling momentum in the rapidly growing market. And it certainly doesn’t hurt that sales of its Lincoln brand vehicles had their best first quarter ever in 2021.

The third and final driver of growth is Ford’s F-Series pickup. For the past 39 years, the F-Series pickup has been the best-selling vehicle in the United States. It’s no secret that trucks and SUVs offer higher margins to automakers than sedans. Until crude oil prices skyrocket, truck sales for Ford will help increase profitability.