Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 4 stocks made the list for top value stocks in the Capital Markets industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Why Focus on Undervalued Capital Markets Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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4 Undervalued Capital Markets Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 4 undervalued stocks in the Capital Markets industry for Wednesday, November 13, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Capital Markets industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

AGM Group Holdings Inc.’s Value Grade

Value Grade:

AGM Group Holdings Inc., a technology company, researches, develops, and sells of cryptocurrency mining machine and standardized computing equipment in Hong Kong, Singapore, and Mainland China. The company offers MetaTrader 5, a future trading solution; and foreign exchange trading system that provides services to financial institutions. It also engages in the research and development, manufacture, and sale of technology hardware products, as well as offers financial technology software services. AGM Group Holdings Inc. was incorporated in 2015 and is based in Wan Chai, Hong Kong.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

AGM Group Holdings Inc. has a Value Score of 88, which is considered to be undervalued.

When you look at AGM Group Holdings Inc.’s price-to-sales ratio at 0.47 compared to the industry median at 2.96, this company has a lower price relative to revenue compared to its peers. This could make AGM Group Holdings Inc.’s stock more attractive for value investors.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. AGM Group Holdings Inc.’s shareholder yield is higher than its industry median ratio of 0.85%. Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. AGM Group Holdings Inc.’s price-to-book ratio is higher than its industry median ratio of 2.10. This could make AGM Group Holdings Inc. less attractive to investors looking for a new addition to their portfolio.

Affiliated Managers Group, Inc.’s Value Grade

Value Grade:

Affiliated Managers Group, Inc., through its affiliates, operates as an investment management company providing investment management services to mutual funds, institutional clients,retails and high net worth individuals in the United States. It provides advisory or sub-advisory services to mutual funds. These funds are distributed to retail, high net worth and institutional clients directly and through intermediaries, including independent investment advisors, retirement plan sponsors, broker-dealers, major fund marketplaces, and bank trust departments. The company also offers investment products in various investment styles in the institutional distribution channel, including small, small/mid, mid, and large capitalization value and growth equity, and emerging markets. In addition, it offers quantitative, alternative, and fixed income products, and manages assets for foundations and endowments, defined benefit, and defined contribution plans for corporations and municipalities. Affiliated Managers Group provides investment management or customized investment counseling and fiduciary services. Affiliated Managers Group, Inc. was formed in 1993 and is based in West Palm Beach, Florida with additional offices in Prides Crossing, Massachusetts; Stamford, Connecticut; London, United Kingdom; Dubai, United Arab Emirates; Sydney, Australia; Hong Kong; Tokyo, Japan, Zurich, Switzerland and Delaware.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Affiliated Managers Group, Inc. has a Value Score of 87, which is considered to be undervalued.

Affiliated Managers Group, Inc.’s price-earnings ratio is 11.8 compared to the industry median at 23.8. This means that it has a lower price relative to its earnings compared to its peers. This makes Affiliated Managers Group, Inc. more attractive for value investors.

Affiliated Managers Group, Inc.’s price-to-book ratio is higher than its peers. This could make Affiliated Managers Group, Inc. less attractive for value investors when compared to the industry median at 2.10.

You can read more about Affiliated Managers Group, Inc.’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Oppenheimer Holdings Inc.’s Value Grade

Value Grade:

Oppenheimer Holdings Inc. operates as a middle-market investment bank and full-service broker-dealer in the Americas, Europe, the Middle East, and Asia. The company provides brokerage services covering corporate equity and debt securities, money market instruments, exchange-traded options and futures contracts, municipal bonds, mutual funds, exchange-traded funds, and unit investment trusts; financial and wealth planning services; and margin lending services. It offers asset management services, including separately managed accounts, mutual fund managed accounts, discretionary portfolio management programs, non-discretionary investment advisory and consultation services, alternative investments, portfolio enhancement programs, and institutional taxable fixed income portfolio management strategies and solutions, as well as taxable and non-taxable fixed income portfolios and strategies. In addition, the company offers investment banking services, such as strategic advisory services and capital markets products; merger and acquisition, equities capital market, debt capital market, debt advisory and restructuring, and fund placement services; and institutional equity sales and trading, equity research, equity derivatives and index options, convertible bonds, event driven sales and trading, and portfolio and electronic trading. Further, it provides institutional fixed income sales and trading, fixed income research, public finance, and municipal trading services; and proprietary trading and investment activities. Additionally, the company offers underwriting, market-making, trust, and discount services, as well as a cloud-based financial market. It serves high-net-worth individuals and families, corporate executives, public and private businesses, institutions and corporations, governments, financial sponsors, and domestic and international investors. Oppenheimer Holdings Inc. was founded in 1881 and is headquartered in New York, New York.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Oppenheimer Holdings Inc. has a Value Score of 95, which is considered to be undervalued.

Oppenheimer Holdings Inc.’s price-earnings ratio is 9.4 compared to the industry median at 23.8. This means that it has a lower price relative to its earnings compared to its peers. This makes Oppenheimer Holdings Inc. more attractive for value investors.

Oppenheimer Holdings Inc.’s price-to-book ratio is higher than its peers. This could make Oppenheimer Holdings Inc. less attractive for value investors when compared to the industry median at 2.10.

You can read more about Oppenheimer Holdings Inc.’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Runway Growth Finance Corp.’s Value Grade

Value Grade:

Runway Growth Finance Corp. is a business development company specializing investments in senior-secured loans to late stage and growth companies. It prefers to make investments in companies engaged in the technology, life sciences, healthcare and information services, business services and select consumer services and products sectors. It prefers to investments in companies engaged in electronic equipment and instruments, systems software, hardware, storage and peripherals and specialized consumer services, application software, healthcare technology, internet software and services, data processing and outsourced services, internet retail, human resources and employment services, biotechnology, healthcare equipment and education services. It invests in senior secured loans between $10 million and $75 million.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Runway Growth Finance Corp. has a Value Score of 85, which is considered to be undervalued.

Runway Growth Finance Corp.’s price-earnings ratio is 13.9 compared to the industry median at 23.8. This means that it has a lower price relative to its earnings compared to its peers. This makes Runway Growth Finance Corp. more attractive for value investors.

Runway Growth Finance Corp.’s price-to-book ratio is higher than its peers. This could make Runway Growth Finance Corp. less attractive for value investors when compared to the industry median at 2.10.

You can read more about Runway Growth Finance Corp.’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Capital Markets Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Capital Markets stocks as well as other industrys.

Choosing Which of the 4 Best Capital Markets Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• AGM Group Holdings Inc. stock has a Value Grade of A.
• Affiliated Managers Group, Inc. stock has a Value Grade of A.
• Oppenheimer Holdings Inc. stock has a Value Grade of A.
• Runway Growth Finance Corp. stock has a Value Grade of A.

Now that you have a bit more background about each of the 4 undervalued stocks in the Capital Markets industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Capital Markets Stocks

Want to learn more about Capital Markets stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 4 Undervalued Capital Markets Stocks for Wednesday, November 13
• 6 Undervalued Capital Markets Stocks for Tuesday, November 12
• 7 Undervalued Capital Markets Stocks for Monday, November 11
• 3 Undervalued Capital Markets Stocks for Friday, November 08

AAII Disclaimer

We make no representations or warranties that any investor will, or is likely to, achieve profits similar to those shown, because past, hypothetical or simulated performance is not necessarily indicative of future results. Before making an investment decision, you should consider your circumstances and whether the information on our content is applicable to your situation. This information was prepared in good faith and we accept no liability for any errors or omissions. The full disclaimer can be read here.