His largest portfolio holdings include Landstar System Inc. (LSTR) and FTI Consulting Inc. (FCN) in business services, plus Penn Virginia Corp. (PVA), Encore Acquisition Co. (EAC) and Tetra Technologies Inc. (TTI) in energy.
It is time for investors to consider moving more of their stock allocations into value-oriented strategies, said John Buckingham, chief investment officer for Al Frank Asset Management in Laguna Beach, Calif. Market history has shown that whenever value has significantly underperformed, that is subsequently followed by lengthy periods of outperformance, he said.
"Given the plethora of bargains from which to choose, investors can benefit from exposure to undervalued stocks across the capitalization and volatility spectrum," said Buckingham, who added an important caveat: "The exact timing when value stocks will reach their intrinsic values is always uncertain."
Growth investing, which is value's more aggressive capital-gains-oriented counterpart, seeks those stocks whose earnings are expected to grow at an above-average rate compared to the industry or stock market. Unlike value investors, growth investors are willing to pay up to capture growth. They often smirk at a long-term buy-and-hold philosophy.
Yet cycles in which growth investing dominates value are just that--temporary movements, said Paul Nolte, investment director for Hinsdale Associates in Hinsdale, Ill.
"Right now, growth investing is kicking the pants off value investing primarily because value indexes are heavy in financial stocks," said Nolte, noting that since 1982 each investment style has enjoyed positive cycles lasting from three to seven years. "In the 1990s, growth was king, in the early 2000s, value was king, and now it's back to growth again."
Wal-Mart Stores Inc. (WMT) and Amgen Inc. (AMGN), selling at their cheapest levels in years, both fit Nolte's criteria for value stocks.
While value indexes have performed better than growth indexes over the past three decades as a whole, it nonetheless may not yet be their time to shine again, said Mark Salzinger, publisher and editor of The No-Load Fund Investor newsletter (www.noloadfundinvestor.com).
"In my judgment, growth funds are still going to do better for a while and my model portfolios are tilting toward growth," Salzinger said. "But don't give up on value altogether because over the long run it has outperformed growth and you really should still own value funds."
Among quality value fund choices with solid potential for a rebound, Salzinger recommends American Century Mid Cap Value Fund (ACMVX), Dodge & Cox Stock Fund (DODGX) and T. Rowe Price Equity Income Fund (PRFDX).
Value and growth investing may seem to go together like fire and ice, but both do have a place in an individual investor's portfolio, which is always a balancing act. At some point, we may even expect to hear the words: Growth investing is dead.