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One of the great things about value shares is they can get motoring if some good news comes along.
However, that’s balanced by the patience that investors often need. Sometimes businesses with low valuations remain forgotten and overlooked for years.
In addition, there’s always the risk that an already cheap stock will just keep getting cheaper. So it’s possible to end up holding shares that grind lower over days, weeks and even years.
Sometimes it pays to hold and wait
It’s enough to make the dourest of value investors cry into their beer. But the waiting game can be worth it. An old stock market saying goes something like: “Patient money often wins in the end.”
That agrees with another expression: “Scared money often loses.” So a value investor who gives up waiting or cuts a loss might sell just before a stock turns around. That would be another reason to cry into beer.
So value investing takes skill, faith, luck and a certain disposition. It’s not for the faint-hearted and there’s an increased risk of watered-down ale!
Nevertheless, one eye-catching success recently has been Greencore (LSE: GNC). The company operates as an international manufacturer of own-brand convenience foods for supermarkets and others.
It’s not an exciting business or a stimulating sector. So that’s maybe why the stock flatlined near its lows for a year through most of 2023.
There was plenty of time for investors to buy the stock — and a long wait for those buying at the end of 2022 when it first hit the bottom.
However, in the end, Greencore started releasing updates saying trading was ahead of the market’s lacklustre expectations. Then it kept repeating the trick at steady intervals.
The stock took off and began a long climb as earnings and the depressed valuation improved. With the share price near 199p, it’s around 110% higher than it was at the beginning of 2024.
So that value investment worked out for some. But what about opportunities for 2025?
Could these zeros be next year’s heroes?
Right now, I reckon several shares measure up as being unloved. For example, the international home improvement retailer Kingfisher delivered a profit warning recently and the share price dropped.
However, the dividend seems to be safe for the time being and City analysts expect better earnings next year. Nonetheless, the sector is cyclical and those analysts could be wrong leading to further weakness ahead for the stock.
IG Design is another business that’s been down on its luck and now carries a low-looking valuation. But any good news on earnings may get the shares moving up again.
However, nothing’s certain and one risk is that the company is another operating in a cyclical sector.
Housebuilder Vistry is also cyclical and the share price crashed during the autumn. But demand for housing remains strong. So it’s easy to imagine the company having its time in the sun again.
All three of these businesses strike me as worthy of investors’ further research and consideration now.