While the large-stock-dominated, capitalization-weighted market averages generally are off to a nice start in 2024, the median returns for members of the Russell 3000 index, the Russell 3000 Value index and the Russell 3000 Growth index are in the red year-to-date, as many of the smaller constituents have been big laggards, suggesting to me that these and other companies that have missed the rally have plenty of upside potential.
Indeed, the Russell 3000 Value index remains near its lowest relative value ever versus the Russell 3000 Growth index.
With many worried that equities are expensively priced with the major market averages at or near all-time highs, I offer the reminder that it is a market of stocks and not a stock market. There are quite a few unloved bargains that I think are worthy of consideration for those who share my long-term time horizon.
STOCK OF THE WEEK: VOLKSWAGEN AG (VWAPY)
One such stock is Volkswagen AG (VWAPY), which released it is preliminary annual financial results last week. VWAPY earned $3.45 per share (vs. $3.29 est.) and had $348 billion of revenue (vs. $344 billion est.) in fiscal 2023.
The German automaker’s CFO Arno Antlitz said he expects “global vehicle sales to slightly increase in 2024.” He continued, “We aim to gain share in the North American region via Volkswagen’s value-over-volume strategy.” The company is also focusing intently on controlling its overhead, with Mr. Antlitz adding, “We believe there’s virtual room for improvement, in particular from the consistent execution of our performance program across all brands.”
Volkswagen said it expects up to 5% revenue growth in 2024 with an operating margin that should come in slightly ahead of the 7.0% margin in 2023. The company touted its ability to share architecture, software, battery technology and mobility across its four business lines: Core, Progressive, Sport Luxury and Trucks.
For our full Market Commentary and more on VWAPY, check out The Prudent Speculator: Free Stock Picks – The Prudent Speculator
