3 Top-Rated Value Stocks Wall Street Analysts Are Loving Now: January 2024

Having avoided a much-dreaded recession last year, investors may feel emboldened to consider risk-on assets, thereby ignoring top-rated value stocks. However, that could be a mistake. Don’t get me wrong – growth-oriented enterprises may see robust tailwinds, especially if interest rates decline. But that prospect might not be guaranteed.

You want to be prepared for anything, which is where the top-rated value stocks may fly. For one thing, these enterprises for whatever reason didn’t receive the same share of the spotlight as other storied names. However, that may put these companies in a better position to surprise Wall Street this year.

Second, these investment opportunities aren’t just discounted based on key fundamental metrics. Rather, they have the support of analysts, a vast majority of whom have issued buy ratings on the underlying securities.

Cheap and heavily endorsed? What more could you ask for? Below are top-rated value stocks to buy.

Broadcom (AVGO)

One of the top chip companies in the world, Broadcom (NASDAQ:AVGO) develops, manufactures and supplies a wide range of semiconductor and infrastructure software products. Its offerings encompass data centers, networking, software, broadband and wireless, among many others. Thanks to its wide relevancies, AVGO managed to more than double in value in the past 52 weeks.

Still, analysts appear confident that it can provide even more gains over the long run, making it one of the top-rated value stocks to consider. On the opportunity front, Broadcom can address myriad in-demand sectors. For example, the global data center market reached a valuation of $192.63 billion in 2021. Per Straits Research, the segment could hit $554.4 billion by 2030, implying a compound annual growth rate (CAGR) of between 10% and 13%.

At the same time, AVGO trades at a discounted cash flow (free cash flow-basis) of 0.89X, below the median 1.41X. Analysts rate shares a consensus strong buy, with the high-side target coming at $1,250.

General Dynamics (GD)

Among defense contractors, General Dynamics (NYSE:GD) has arguably fallen by the wayside compared to some of the most popular enterprises. That partially explains GD’s relatively pedestrian return of over 8% in the past 52 weeks. However, in the past six months, GD gained almost 18% of equity value. Increasingly, the company’s specialty in artillery shells has garnered relevance due to Russia’s aggression in Ukraine.

What’s worrying from a geopolitical standpoint, the Russians appear to be ratcheting up the pressure with cloaked language. Per TASS – Russia’s main news agency – President Vladimir Putin stated that Latvia expelling Russian citizens from its borders represents a “very serious” matter that directly affects the security of his country.

No one can say for sure what Putin has in mind regarding the Baltic states. However, given inflamed tensions worldwide, no one can rest easy. Cynically, such a dynamic may help GD, making it one of the top-rated value stocks.

Currently, trades at a trailing-year earnings multiple of 21X, below the sector median 32.5X. Also, analysts peg shares a strong buy with a $289.36 average price target.

Taiwan Semiconductor (TSM)

If you’re looking for a deal among top-rated value stocks and can handle some geopolitical saber-rattling, Taiwan Semiconductor (NYSE:TSM) presents an intriguing narrative. Per its corporate profile, TSMC is a contract manufacturing and design company. Notably, it’s the world’s largest dedicated independent semiconductor foundry, building chips for other tech enterprises. Therefore, it plays a vital and indelible role in the broader semiconductor ecosystem.

Of course, TSMC has in recent years come under significant concerns due to its home country’s relations with China. Given the war in Ukraine, many fear that a massive conflict could spill over in the Pacific. That being said, investors don’t seem particularly worried, with shares up nearly 28% in the past 52 weeks. The cherry on top comes from the firm’s fourth-quarter earnings report, which saw beats in profit and revenue expectations.

Even so, TSM can be had for a discount, with shares trading at only 16.53X forward earnings. That’s favorably below 63.64% of sector rivals. Finally, analysts rate shares as a unanimous strong buy with a $133.75 average price target.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.

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