Six Reasons Investors Should Consider U.S. Value Stocks

By Phil Davidson & Peter Hardy, CFA - April 2019

Key Takeaways

  • The U.S. market is deep and diverse, offering ample opportunity to own stocks in high-quality, dividend-paying companies. We think the market's characteristics, combined with the diversification benefits of U.S. exposure, make U.S. equities an appropriate, material position in global investors' portfolios.
  • Style is an important consideration when investing in the U.S. A value strategy focuses on companies that trade at a discounted valuation that doesn't reflect the issuer's future quality and earnings power. We believe buying undervalued, higher-quality stocks represents an opportunity for investors to benefit when the stock price reverts to higher levels. Historic returns show that such an approach outperformed with less risk over time.
  • An emphasis on income has also proven to be successful, as dividends have provided a stable and more certain source of investment returns. Importantly, focusing on higher dividend-paying companies may be a way to identify higher-quality companies.

In this paper, we identify six reasons we believe investors should consider a material allocation to U.S. value stocks.

Phil Davidson, CFA
Executive Portfolio Manager
Peter Hardy, CFA
Peter Hardy, CFA
Sr. Client Portfolio Manager

Six Reason Investors Should Consider U.S. Value Stocks

April 2019 | Market Perspective

Download PDF
  • Related Articles
  • More From Author

The Search for Bargains in Value Investing

It's been a tough year for value investors, but VP and Sr. Portfolio Manager Michael Liss sees risk-rewards in energy and consumer staples.

Emerging Market Stocks: Have They Hit Bottom?

2018 hasn't been kind to emerging markets. Sr. Portfolio Manager Patricia Ribeiro believes fears of contagion, which never materialized, caused the recent volatility. Read why she's still encouraged by opportunities.

Getting to Know U.S. Value Investor Phil Davidson

Veteran investment manager has a record of creating value for investors.

    Getting to Know U.S. Value Investor Phil Davidson

    Veteran investment manager has a record of creating value for investors.

    Six Reasons Investors Should Consider U.S. Value Stocks

    Learn why we believe high-quality, dividend-paying U.S. companies may offer solid risk/reward potential.

    The Winners and Losers of Tax Reform

    How much of the tax benefit is kept, reinvested, or “competed away” is critical in determining who will come out ahead.

      Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.

      The opinions expressed are those of American Century Investments (or the portfolio manager) and are no guarantee of the future performance of any American Century Investments' portfolio. This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.

      Diversification does not assure a profit nor does it protect against loss of principal.