Are NZX value stocks going to outshine in the upcoming period?

Summary

  • The post-pandemic era of the economic recovery has seen value stocks outshining others.
  • Value stocks could provide long-term returns though they can take a lot of time for the same.
  • The companies in the growing stage often comprise growth stocks that choose to reinvest their earned profits.

New Zealand has so far successfully managed to contain the dreadful COVID-19 pandemic.

As per Stats NZ’s latest update, the country’s GDP grew by 1.6% in March 2021 versus 1% decrease noted in December last year.  

On the back of the economic recovery, value stocks have noted an upturn, in sync with investors’ position.

What is deemed as a value stock?

Value stocks can be identified by their low price-to-book ratio, substantial dividend yield, low price-to-earnings ratio, etc., as depicted in the image below.

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Further, a value stock trades at lesser price when compared to its usual performance on a stock exchange. They may also be a part of the sector which trades at a lower price to the wider market.

Did You Miss Read; NZX-listed Value stocks to look at in 2021

How is value stock different from growth stock?

Value stocks are expected to give a greater long-term return when compared to growth stocks due to the fundamental risk factor.

Growth stocks usually appear to be promising in terms of their huge potential to surpass in the future. They are in the growing stage and reinvest their earnings for further development.

The key difference between value and growth stocks is defined in the image below.

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A value stock could require time to come out from its undervalued stance, however, there is a risk associated with the situation, which might delay the process.

What are the examples of NZX-listed value stocks?

We have cherry-picked few values stocks that trade on the NZX, let us now apprise ourselves of their latest updates.

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Kiwi Property Group Limited (NZX:KPG)

Owner of nearly NZ$3.2 billion Kiwi property and handling more than third party’s property worth NZ$400 million, Kiwi Property Group Limited leads the New Zealand’s property investment market.

On 17 June, the Company’s dividend yield was noted at 5.57% and has a market capitalisation of ~1.8 billion. Kiwi Property Group has a P/E ratio of 9.34x and its EPS stood at NZ$0.125.

The same day, Kiwi Property Group closed the market session, with no change from the previous day’s price at NZ$1.17.

Do Read; Look at the trading volume of 6 popular NZX stocks

Australia and New Zealand Banking Group Limited (NZX:ANZ, ASX:ANZ)

Based in Melbourne, Australia and New Zealand Banking Group Limited provides banking services in the Australasia region.

With a 4.98% dividend yield, Australia and New Zealand Banking Group’s market capitalisation stood at $88.75 billion, as on 17 June. The Company has a P/E ratio of 16.35x and the earnings per share was noted at $1.905.

Australia and New Zealand Banking Group ended the trading session 1.25% higher at NZ$31.53. 

Also Read; New Zealand’s 6 stock market news one should not miss - NZL, ARV, MCY, VTL, SKC, ANZ

Oceania Healthcare Limited (NZX:OCA ;ASX:OCA)

Health care services provider, Oceania Healthcare Limited, has significant projects in the pipeline. The Company has adequate land to construct around 1,851 new aged care residences, out of which 86% has been approved.

Oceania Healthcare Limited has a market capitalisation of $1.059 billion and has a P/E ratio of 11.3x, as on 17 June. The Company’s dividend yield was 2.25%, while earnings per share was recorded at $0.138.

With a decline of 1.32%, Oceania Healthcare was at NZ$1.5 by the end of the market session.

A Quick Read; Have these 5 stocks been most active on NZX today?

Investore Property Limited (NZX:IPL)

With a business in property ownership, Investore Property limited makes an investment in large format retail property assets.

The market capitalisation of Investore Property stood at NZ$758.358 million and the EPS was noted at NZ$0.445, on 17 June. The Company’s dividend yield was noted at 4.22%, with a P/E ratio of 4.6x.

Investore Property closed the trading session flat at NZ$2.05.

Must Read; 5 Hot NZX Dividend Stocks That Deserve Your Attention

Are value stocks a good investment?

As per market experts, value stocks might hit a rough patch during the short period, however, it is just a groundwork prepared for bigger prospects in the upcoming period.

In the past, value stocks have often done well during the economic recovery phase, similar to the post-pandemic era of the contemporary period.

An investment in value stocks calls for research work and keeping a track of market trends, which can bear its fruit when the right time arrives.


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