Value Investing Veteran Bill Nygren Spots Hidden Bargains Beyond the ‘Mag 7’ Tech Giants—A Potential Goldmine for Savvy Investors
Bill Nygren’s recent commentary offers a compelling roadmap for investors navigating today’s overheated market, where the S&P 500 increasingly resembles a megacap tech showcase rather than a broad-based index. As a seasoned value investor with Oakmark Funds since the 1980s, Nygren’s insights carry weight—not just for their historic perspective but for their actionable contrarian edge in a market dominated by a handful of tech giants.
Beyond the Tech Titans: Seeking Value in Overlooked Corners
The S&P 500’s rally to record highs has been largely fueled by mega tech stocks like Nvidia and Alphabet, pushing valuations to levels that many traditional value investors find uncomfortable. Nygren’s strategy? Look elsewhere. His focus is on companies trading at single-digit price-to-earnings (P/E) multiples—an increasingly rare breed in today’s market frenzy.
This is a critical takeaway for investors: don’t get trapped in the tech bubble. Diversification into undervalued sectors with strong fundamentals can offer both downside protection and upside potential. According to a recent report by Morningstar, value stocks have begun to outperform growth stocks in 2024, signaling a potential shift in market leadership that investors should not ignore.
Hidden Gems Spotlight: Corebridge Financial, Delta Air Lines, and Merck
Nygren highlights three undervalued stocks that exemplify his approach:
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Corebridge Financial (CRBG): Trading at just five times earnings, this retirement services firm stands out for its robust share buyback program. Nygren notes that while the space is competitive, Corebridge’s capital allocation strategy—reinvesting heavily in share repurchases—could pay off handsomely over the next five to seven years. This is a classic value play: a strong balance sheet, low valuation, and a clear path to shareholder returns. Investors should watch for buyback announcements and evaluate how Corebridge’s competitive positioning evolves in the retirement services sector.
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Delta Air Lines (DAL): Despite a 4% decline year-to-date, Delta’s fundamentals remain strong. Nygren praises management and a balance sheet that outshines other major airlines. With travel demand stabilizing and pricing power returning, Delta’s single-digit P/E multiple seems like a bargain. Importantly, Delta’s ability to raise fares amid a tough environment for discount airlines suggests improving margins ahead. For investors, this signals a timely opportunity to capitalize on the recovery in air travel—a sector often overlooked in value discussions.
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Merck (MRK): Nygren’s bullish stance on Merck is rooted in the company’s diversified portfolio—vaccines, animal health, and innovative cancer treatments. The ongoing pipeline developments, particularly combinations involving Keytruda, position Merck for sustained growth. Given the increasing global demand for vaccines and cancer therapies, Merck’s valuation offers a compelling entry point. Investors should monitor clinical trial progress and regulatory updates, as successful drug approvals could act as significant catalysts.
What This Means for Investors and Advisors
Nygren’s picks underscore a broader investment thesis: value investing is not dead; it’s evolving. The key is to identify companies with strong fundamentals, low valuations, and strategic capital allocation—traits that can deliver superior risk-adjusted returns in a market dominated by high-flying tech stocks.
Advisors should consider the following actionable steps:
- Rebalance portfolios to include undervalued sectors outside of tech, such as financial services, industrials, and healthcare.
- Focus on capital allocation strategies—companies with aggressive buybacks or dividend growth often signal management’s confidence in future earnings.
- Monitor sector-specific catalysts, such as regulatory approvals in pharma or travel demand recovery metrics in airlines.
- Educate clients on the risks of tech concentration and the benefits of diversification into value-oriented stocks.
Looking Ahead: Is a Value Renaissance Imminent?
With the S&P 500’s tech giants potentially approaching peak valuations, the next market phase could favor companies like Corebridge, Delta, and Merck—those offering tangible earnings at reasonable prices. A recent CFA Institute survey supports this view, indicating a growing institutional appetite for value stocks amid rising interest rates and inflation concerns.
At Extreme Investor Network, we believe the next 12 to 24 months could mark a renaissance for value investing, especially for those willing to look beyond headline-grabbing tech. Investors who heed Nygren’s advice and adopt a disciplined, research-driven approach will likely be best positioned to capture the market’s next wave of growth.
Unique Insight: Consider the example of Corebridge’s buyback strategy in the context of the broader financial sector. According to S&P Global, companies that aggressively repurchase shares during periods of undervaluation have historically outperformed their peers by 3-5% annually over the following five years. This suggests that Corebridge’s current strategy isn’t just a defensive move—it’s a proactive growth catalyst that savvy investors should watch closely.
Stay tuned to Extreme Investor Network for the latest expert analyses, market trends, and investment strategies that go beyond the headlines. Your portfolio deserves more than just the usual tech hype—it deserves insight that delivers.
Source: Longtime value investor Bill Nygren finds cheap stocks outside ‘Mag 7’
