Value investors are often ignored or derided during a bull market. That’s because high-growth names tend to take off. But when markets sell off, more value stocks emerge. Those who buy into value names can earn above-average returns, and often do so with less volatility.
Investing in such stocks makes it easier to compound wealth over time, and often makes it easier to ride out extreme market conditions. Long-term investors can find a number of value names today.
One place where investors can quietly compound wealth is in industrial stocks. Ingersoll Rand (IR), a maker of pumps and compressors, is in a steadily-growing business that looks like a reasonable value, and one capable of continuing to beat the market over the long term.
Shares go for about 15 times earnings, and the company has grown earnings and revenue by low-double-digits over the past few years.
Action to take: Shares are worth buying with an eye towards long-term returns. The company pays a modest 0.1 percent dividend at today’s prices, with a low payout ratio that can likely lead to increased dividends over time.
For traders, the March 2023 $60 calls, last going for about $1.75, offer mid-double-digit returns on a further rise in shares from here. Given the stock’s low volatility, the trade is likely to provide moderate gains, but short-term market volatility may cause a jump earlier for quick profit-taking.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.