From Morningstar: 2025-03-25 06:12:00

In 2024, growth stocks outperformed value stocks by 10 percentage points, as per the Morningstar US Growth Index and Morningstar US Value Index. However, the tides have turned in 2025 with value stocks gaining momentum, recommended by Morningstar’s US Market Outlook for being undervalued compared to growth stocks.

Morningstar compiled a list of the best value stocks for long-term investment based on criteria like landing in the value portion of the Morningstar Style Box, being part of the Best Companies to Own list, and trading below fair value estimates. The 10 cheapest value stocks included Pfizer, Campbell, Nike, Huntington Ingalls, Constellation Brands, Brown-Forman, Alphabet, GSK, Zimmer Biomet, and Danaher.

Pfizer, trading at a 38% discount to its fair value estimate, is the top choice among drug manufacturers with a diverse portfolio of drugs and potential blockbusters in the pipeline. Campbell, 36% below its fair value estimate, boasts a wide economic moat in the packaged foods industry, with plans to unlock savings through fiscal 2028. Nike, at a 34% discount, dominates the athletic footwear market and is set for growth under new CEO Elliott Hill.

Huntington Ingalls is a defensive play in the aerospace and defense industry, trading at a 34% discount, with long-term revenue visibility and profitability from shipbuilding for the US Navy. Constellation Brands, 33% below fair value, leads in alcoholic beverages with strong beer volume growth potential. Brown-Forman, trading 31% below fair value, excels in premium spirits with a strong brand portfolio.

Alphabet, trading at a 31% discount, is a technology leader in various sectors like advertising and cloud computing, poised to maintain its search and advertising dominance. GSK, 31% below fair value, is a drug manufacturer with a strong product pipeline and focus on innovation and emerging markets. Zimmer Biomet, 25% below fair value, leads in large-joint reconstruction with loyal customers and innovative products.

Danaher, at a 21% discount, is a top player in diagnostics and research with a focus on acquisitions and divestments for market expansion. Value stocks are those trading below their worth, as represented by the Morningstar Style Box and fair value estimate based on future cash generation potential. Investors can use tools like the Morningstar Investor screener and explore managed products like ETFs or mutual funds for more value stock ideas.



Read more at Morningstar: 10 Best US Value Stocks to Invest in for the Long Term