7 Value Stocks With Downside Protection

Growth stocks outshone value stocks in the past decade. But no matter how high growth stock share prices go, there’s one thing that value stocks tend to have that growth stocks don’t – downside protection. Throughout history, the price-earnings ratio of the S&P 500 index has never fallen below 5, suggesting there’s theoretically a floor in how cheap a profitable stock can get. Bank of America recently compiled a list of “buy” rated S&P 500 stocks with relatively low P/E ratios. Here are 10 stocks that make the grade.

Marathon Petroleum Corp. (ticker: MPC)

Oil refiner Marathon Petroleum Corp. hasn’t exactly been on a tear in 2018, down 3.9 percent on the year. But while rising crude oil prices may be pressuring Marathon’s margins, analyst Doug Leggate says the dip is a buying opportunity for long-term investors. Leggate expects $1 billion in cost synergies over the next several years following the company’s $23.3 billion buyout of Andeavor. Marathon has a relatively low P/E of 13 and an even lower forward P/E of 8.3. Bank of America has a $95 price target for MPC stock.

Exelon Corp. (EXC)

Exelon is a U.S. electric utility giant that operates four power companies as well as the largest fleet of nuclear power plants in the country. Utility stocks typically don’t have high earnings multiples, but analyst Julien Dumoulin-Smith says Excelon has room to expand its earnings multiple closer to its peer group average. Dumoulin-Smith says Excelon has plenty of financial flexibility to increase its utility capital spending and raise its dividend, which stands at 3 percent. Exelon’s P/E ratio is only 11.8. Bank of America has a $47 price target for EXC stock.

Nucor Corp. (NUE)

Nucor stock has struggled despite aggressive international steel tariffs imposed by President Donald Trump. After peaking in May, U.S. steel prices have declined along with steel stocks like Nucor. Analyst Timna Tanners says U.S. hot-rolled coil prices will drop from around $800 per ton to about $750 in 2019. However, Nucor has the cash flow to aggressively boost capital expenditures next year and/or buy back up to 11 percent of its stock under its current capital return plan. Bank of America has…

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