Forecast: These could be the best performing value stocks by 2030

The S&P500 is near an all-time high, but not all stocks are doing so well. If you look closely, there are still some excellent bargains to be had in the stock market, especially if you look beyond the high-growth tech stocks that are making most of the headlines. With that in mind, here are three value investments you can make right now. I have all three in my own portfolio and am fairly confident they will produce excellent results for patient investors.

3 Value Stocks That Could Outperform the Market by 2030

Without further ado, here are three value stocks that could outperform the market for the rest of the decade and some reasons why.

1. Starbucks

Coffee giant Starbucks (SBUX -1.75%) has had a rough 2024. The company reported a surprise decline in store revenue and a 6% drop in customer traffic in the first quarter, and the stock plummeted. Even after a slight recovery, Starbucks is trading more than 25% below its 52-week high.

Despite the poor stock performance, it is important to recognize that the problems on temporary Headwinds, such as pressure on consumer spending. Starbucks has also made efficiency gains in improving supply chains and expects to save $4 billion over the next four years.

2. Real estate income

Real estate income (Ö 0.74%) is one of the leading real estate investment trusts (REITs). If you’re not familiar with the business, Realty Income owns more than 15,400 properties in the U.S. and Europe and is designed to generate predictable and increasing rental income over time.

The stock is down about 35% from its all-time high (which was reached just before the COVID-19 pandemic), but it’s important to know that the business is doing well. REITs are very sensitive to rising interest rates, and Realty Income — which has a strong history of market-beating returns over the past three decades — could be a big winner when interest rates normalize. Realty Income is one of the largest investments in my own stock portfolio and one that I plan to hold for the next few decades.

3. Vanguard Small Cap Value ETF

Two of the most undervalued stock groups currently are small caps and value stocks, and the Vanguard Small Cap Value ETF (VBR 0.56%) you can invest in both without being too fixated on a single company.

Small caps are trading at their lowest price-to-book ratios compared to the S&P 500 in more than 25 years. And over the past decade, growth stocks as a group have outperformed value stocks by an astonishing 168 percentage points.

There are some good arguments for these types of stocks right now. The last time the valuation gap was this wide in small caps, they outperformed the S&P 500 for over a decade. And if interest rates start to fall, they could lower borrowing costs (value stocks use debt rather than growth) and could also lead to an acceleration in consumer activity.

Remember the goal of value investing

As a final thought, remember that value investing is a long-term practice. I have absolutely no idea what these stocks will do over the next few months or for the rest of 2024, and no one else does. But these are three excellent investments that look like excellent values ​​for long-term investors right now, and I’m pretty confident that investors with a time horizon of five years or more will be glad they bought at current levels.