With treasury yields heading higher and a hawkish Fed meeting last week, investors should be prepared for a rotation back into value stocks in the coming sessions. Many of these moves have already started to occur and while it's hard to predict just how long the rotation lasts, it’s still a smart idea to put together a go-to list of value stocks to consider parking some capital in.
Areas of the market, like financials and the energy sector, are seeing inflows and holding up well during the recent market selloff, which means it’s hard to argue with the tape at this time.
Keep in mind that rising yields and inflation concerns could be here to stay, so bumping up your exposure to value could pay off in a big way. When it comes to value stocks, certain names tend to see inflows time and time again. These are high-quality companies that can be a nice addition to any long-term portfolio and are worth looking at given the current market factors at play.
Check out the following list of 3 go-to value rotation stocks to buy now if you are interested in potentially taking advantage of the circumstances.
1. Bank of America
This is a great name to look at if you are interested in adding exposure to the financial sector, which is typically one of the first areas of the market to look at when bond yields jump. Bank of America (NYSE:BAC) is a quality blue-chip name that is one of the largest U.S.-based financial holding companies and a favorite holding of Warren Buffett’s Berkshire Hathaway (NYSE:BRKa), which is a big vote of confidence.
The company serves consumers, small and medium-sized businesses, and large corporations and has created one of the strongest brand names in banking, which makes it a good name to watch as the economy rebounds from the impacts of the pandemic.
Keep in mind that Bank of America is going to see big increases in profits if interest rates go up, which is certainly a possibility at some point. There’s also a lot to like about the company’s prospects as government stimulus payments wind down, as consumers and business owners will look to Bank of America for loans. Finally, the fact that the stock offers investors a 1.94% dividend yield and is trading around its 52-week highs makes it a great go-to value stock to consider.
2. Halliburton Company
This leading oilfield services company plays a key role in the global energy industry and is another great option to consider as money rotates back into economically sensitive stocks. Halliburton helps with everything from locating hydrocarbons and managing geological data to drilling and constructing oil wells and is a great way to play rising oil and natural gas prices. It’s also a member of the S&P 500 and according to MarketBeat’s consensus analyst price target has 5.15% of upside from current levels.
Halliburton Company (NYSE:HAL)delivered a Q2 revenue increase of 7% sequentially and could be in for a strong remainder of the year as its business continues to see a strong recovery in international activity. The stock just reclaimed the 200-day moving average and might be a strong value name to consider adding in the coming sessions, particularly if we see yields continue to jump and oil prices heading higher.
3. Ford Motor Company
Another great name to add to your go-to value stock list is Ford Motor Company, one of the largest U.S. producers of cars and trucks. This company likely needs no introduction, as Ford’s iconic vehicles are seen driving on roads throughout the country. However, investors might not be aware that Ford Motor Company (NYSE:F) has been going through a lot of changes lately which could pay off over the long-term, especially if we see a sharp recovery in the U.S. auto industry in the coming months.
The company’s new CEO Jim Farley is focused on committing billions towards electric and autonomous vehicle growth programs, which are clearly huge opportunities for the automaker. Ford recently announced that it plans to spend $11.4 billion on new production sites to build electric pickup trucks, cars, and their batteries, which is the largest ever U.S. investment in electric vehicles at one time by any automotive manufacturer.
There’s also a lot to like about how the company has penetrated international markets like China, Europe, and South America, which could provide strong sales growth for the company. Finally, Ford is in the midst of a multi-year restructuring plan that should lead to big improvements in its operating costs, which is another reason to put it on your go-to value stock list.