The stock market correction earlier this year caused some fundamentally sound stocks to plummet in price. This volatility can be attributed to increased geopolitical tensions between Russia and the U.S. amid the Russian-Ukraine war, and 40-year high inflation rates. Nevertheless, the environment has caused many high-quality stocks to trade at cheap valuations relative to their earnings and long-term growth potential.
Considering soaring inflation currently, which might wreak havoc on the growing economy, investors are looking for stability and thus are investing heavily in value stocks. Such stocks can withstand high inflation and perform relatively well in uncertain periods. Value stocks are also known for returning more cash to their shareholders in the form of dividends. Investors’ interest in value stocks is evidenced by the Vanguard Value ETF’s (VTV) 11.4% gains over the past year.
