In addition to the growth stocks, which are suffering the most from the current declines, the price of the latter, i.e. value stocks, is also falling. Many of them are now getting to interesting valuations that we have not seen for a long time. What three particular stocks are now at more than a 20% discount and why are they worth paying attention to?

It may be that it is not 100% clear to some what a value stock actually means. These are stocks that are trading at a lower price than the company's performance would otherwise suggest. Investors in value stocks seek to take advantage of inefficiencies in the market because the price of the underlying stock may not match the performance of the company. These stocks should have a low P/E, pay dividends, and have a low price-to-book value (P/B) ratio. That would be a start, now let's move on to specific stocks.

1. Bank of America $BAC

This bank is one of the largest financial institutions in the world. It belongs to the big four along with Citigroup, JPMorgan Chase and Wells Fargo. It operates in a total of 4 segments, namely Consumer Banking, Global Wealth & Investment Management, Global Banking and Global Markets. Consumer Banking provides the classic services that we know from Czech banks, i.e. savings accounts, current accounts, mortgages, and consumer loans, for example. Global Wealth & Investment Management offers investment and brokerage products and services, as well as pension insurance. Global Banking deals with leasing or, for example, underwriting and advisory services. The last segment, Global Markets, handles currency or commodity derivatives.

BAC shares have fallen nearly 25% since the beginning of the year and are now trading at $34.8. However, it's still quite far from the yearly low of $29.67. The current price gives the company a PE ratio of 10.85, which is still quite acceptable for a value stock. The company pays a dividend of $0.22 per share, which implies a 2.53% dividend yield. Dividend investors will be interested to know that the company has been able to increase its dividend regularly. In addition, the company is also fulfilling its buyback programs, as we can see in the illustrative screen below.

Given the nature of BAC's business, it's worth mentioning the Fed's interest rate hikes. They are now at 2.5% and it is likely that these will rise again. But what do interest rates actually mean for banks? As interest rates rise, the profitability of the banking sector increases. Institutions in the banking sector, such as retail banks, commercial banks, investment banks, insurance companies and brokerage firms, have huge cash reserves thanks to client balances and trading activities. And given the BAC's wide reach, it has benefited and may yet benefit.

2. Intel $INTC

The company is engaged in the design, manufacture and sale of computer products and technology worldwide. It offers platform products, such as CPUs and chipsets and system and multi-chip packages, and non-platform or adjacent products, including accelerators, boards and systems, connectivity products, graphics, and memory and storage products.

If we had to point to anyone who is dealing the worst with the current downturn in the semiconductor sector, Intel would be one of the first to take a hit. It blamed its worse quarterly results on supply chain issues, covid restrictions in China, as well as its own internal troubles. The stock now trades at $29.36, down 44.82% YTD. This puts the company at a PE ratio of 6.29, clearly the lowest valuation in the semiconductor industry. The current price, which hasn't been lower in 5 years, also causes a decent 6.29% dividend yield. The payout is regularly increased and most recently shareholders received $0.365 per share.

3. Verizon Communications $VZ

Verizon Communications Inc. through its subsidiaries offers communications, technology, information and entertainment products and services to consumers, businesses and government entities worldwide. Its Consumer segment provides postpaid and prepaid service plans, Internet access on laptops and tablets, wireless devices, including smartphones and other handsets, and wireless Internet-enabled devices, such as tablets and other connected devices with wireless connectivity, including smartwatches. It also provides fixed connectivity solutions for the home, such as Internet, video and voice services, and sells network access to mobile virtual network operators.

The biggest competitor can be considered AT&T, with which I will also make a small comparison. AT&T will be on the left and Verizon on the right. Bold indicates what comes out as the better value. LTM (last twelve months) data I drew from Koyfin.

• Price/earnings - 6.13 X 8.18
• Price/book - 1 X 2
• Dividend yield - 6 .67% X 6.41%
• Payout ratio - 66.9% X 51.08%
• Net Margin - 12.73% X 15.48%

Verizon shares are now trading at $40.76, down 22% from the beginning of the year. The current price is the lowest since 2012. That's already a really decent decline, which of course could still continue given the stock market's fall.

Summary

Of today's picks, I only own a few shares of Verizon, which I may be adding to within a few months. But I think they are all interesting companies. Bank of America impresses me the most, then Verizon, even though it has a lot of debt, which I must mention. Intel is going through a bit of a downturn, but that is in all semiconductor companies to some degree.

Do you own any of the stocks mentioned? Have you not resisted the discount, are you waiting, or have you given more growth stocks a chance? 🤔