The Best Deals in Value Stocks

Source: Federal Reserve Bank of New York via Facebook

Investors may have suffered through the worst case of stock market "indigestion" in multiple generations between 2007 and 2009, but the subsequent bull market has produced some of the most robust returns investors have ever seen.

Since the lows of March 2009, the broad-based S&P 500 is up more than 200%, while the technology-heavy Nasdaq has gained nearly 300%! A return of steady growth to the U.S. economy, coupled with record-low lending rates and an unemployment rate that dipped back to 5.3% in June (its lowest reading since April 2008) continue to "feed the bull," so to speak.

The best deals in value stocksWhen the market triples (or quadruples) over the course of six-plus years, it can be hard for investors to find attractive value stocks. The assumption is that because the market has rallied so much, valuations are a lot higher than they were in years' past. It's not uncommon for P/E ratios to expand, or for investors to be more willing to pay more for stocks, during an extended bull market.

But I'm here to tell you that there are still attractive value stocks worth buyingif you're willing to do a little digging. Today I'm going to share with you some of my perceived to be best deals in value stocks. As always, consider my selections a jumping-off point for further research and not a set-in-stone recommendation to buy, as stocks can just as easily go down as they can go up.

2015 Ford F-150. Source: Ford

1. Ford Let's start this list of the best deals in value stocks by accelerating from 0 to 60 mph with Detroit powerhouse Ford.

Ford is firing on nearly all cylinders. Within the United States, as of its June update, the newly redesigned F-series was selling for a higher price than ever before, and it was moving off dealer lots in half the time it took its peers to sell. The F-Series pickup has been America's best-selling vehicle for 33 straight years, and the best-selling truck for an impressive 38 years in a row. Translation: Ford understands how to reach truck buyers.

But Ford has a lot of other catalysts working in its favor. On a per capita basis, China has plenty of room for auto growth in the coming decades -- even if Ford's first-half growth in China was flat in 2015. As its middle class attains more wealth and infrastructure within China is built outward from major cities, Ford could find that China becomes its primary growth driver. Innovation such as its EcoBoost engines, which improve fuel efficiency without sacrificing power, and conveniences like the addition of in-cabin luxuries and infotainment systems in nonluxury-priced cars, also make Ford the king of consumer brand loyalty.

Based on Wall Street's projection of $2.02 in EPS by 2017, Ford's future P/E (looking a few years down the road) of seven is microscopic. Tack on expected revenue growth of 5% to 7% per year and you have what I believe is a value stock worth buying.

Source: Flickr user jeyulio

2. Apple Technology kingpin Apple may not be able to churn out growth like it did in the "old" days, but investors still have an opportunity to benefitas the company transforms from being just a products company to a platforms company.

To be clear, Apple still has what it takes to create meandering lines of consumers around its stores when it releases its latest iPhone. Through just the first two quarters of its fiscal year, Apple has moved more than 135 million of its iPhones, and it could be well on its way to breaching the 200 million unit sale barrier in 2015.

Yet Apple is so much more than just its product innovation. Apple Pay is looking to completely revolutionize the way we pay for goods and services, as well as store our critical financial information. Likewise, the Apple Watch is attempting to meld consumers' desire for convenience and wearable gadgets. The potential the Apple Watch could play (down the road) in personalizing healthcare by tracking data and sending it directly to our physicians is huge.

Thus, with Apple valued at a mere 13 times forward earnings, and capable of growing comfortably at a mid-single-digit pace thanks to consumers' loyalty to the brand, I'd opine it's still an attractive stock.

Source: Food and Drug Administration via Facebook

3. Gilead Sciences You could still make the case that biotech blue-chip stock Gilead Sciences is a growth story, but with its once-daily oral hepatitis C therapies Harvoni and Sovaldi set to face new competitors and witnessing their prescriptions plateau, it might be time to consider Gilead more of a value stock with projected top-line growth in the mid-single-digits beyond 2015.

Although Harvoni and Sovaldi may have new competitors entering the market, it doesn't mean their $10 billion-$12 billion in annual combined sales look as if they'll be threatened. Gilead is still the leader when it comes to HCV treatment convenience since the majority of its treatments can be administered without the need for a ribavirin.

Additionally, Gilead has a rapidly growing four-in-one HIV/AIDS pill in Stribild, and it's researching a handful of globally important indications including hepatitis B and nonalcoholic steatohepatitis. Gilead's oncology pipeline may hold blockbuster potential as well.

With a forecast of nearly $12 in EPS expected by 2017, Gilead's current price translates to a P/E of about 10. Add on its recently instituted $0.43/quarter dividend, and you can probably understand why I believe this is one of the best deals in value stocks.

Source: IBM via Facebook

4. IBM For the best deals in value stocks sometimes the easiest thing to do is to take a close look at Warren Buffett's portfolio. Recently, Buffett has been particularly keen on technology stalwart IBM.

IBM certainly isn't without its challenges as the company has arguably been late to adopt to a changing technology medium. Gone are the days where individual computers were controlled by software programs. Today's business environment is dominated by data centers and the cloud, where a massive amount of data can be stored and accessed from virtually anywhere, by any employee, and from any device.

IBM has made the cloud its focus moving forward, but investors have to understand that such a dynamic shift in IBM's business model doesn't happen overnight. Thankfully, IBM's legacy businesses are still very profitable and they continue to produce substantial cash flow. The company's first-quarter results were also encouraging, with cloud revenue up more than 75% when adjusted for currency effects and divestments.

Even though IBM's top-line growth will likely be challenged throughout the remainder of the decade, its projected EPS of more than $17 by 2017 could place its P/E below 10 if its current stock price were to hold. Considering its 3% yield and ample cash flow, IBM appears to be a bargain for the patient investor.

Source: Bank of America via Facebook

5. Bank of America Lastly, I believe some of the best deals in value stocks can be found in the financial sector. My selection among the financials (and I currently own it my own portfolio) is Bank of America.

Bank of America has struggled to put the credit crisis and housing bubble firmly in the rearview mirror. Its purchase of Countrywide Financial has cost B of A tens of billions of dollars in fines stemming from Countrywide's mortgage practices prior to the housing meltdown. Couple that with historically low yields that have stymied banks' ability to boost their profits, and you can get a decent feel for why Bank of America hasn't returned anywhere near its old highs.

But in Bank of America's Q2 report its profit more than doubled to $5.3 billion from $2.3 billion in the year-ago period as an absence of legal charges boosted its bottom line. As B of A moves beyond these fines and it prepares for a rise in lending rates, which should be great news for banks, it's possible that nearly $2 in EPS may be achievable by 2018.

As it stands now, Bank of America is valued at just 10 times its 2017 EPS projections, and it's likely to get the nod in upcoming years to expand its dividend, which currently sits at 1.1%. It's a long-term value stock that I suspect still has room to move higher.

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Sean Williamsowns shares of Bank of America, but has no material interest in any other companies mentioned in this article. You can follow him on CAPS under the screen nameTMFUltraLong, track every pick he makes under the screen nameTrackUltraLong, and check him out on Twitter, where he goes by the handle@TMFUltraLong.The Motley Fool owns shares of, and recommends Apple and Gilead Sciences. It also recommends Bank of America and Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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