Investing in areas of the market that are out of favour can reap good returns over time - and value stocks, which fall into real economy segments such as energy, mining, banks and industrials - currently fit into this category.
IC TIP:
Buy
at
159p
Tip style
Growth
Risk rating
High
Timescale
Long Term
Bull points
- Targets value stocks, which could do well
- Good record over recent years
- Can invest in smaller companies
Bear points
- Poor performance longer term
- Volatility
Peter Toogood, investment director at research company City Financial, believes that a rotation from growth to value could occur in one of two ways. "The first is a complete market washout, reminiscent of 2008, when all sectors of the market fell in tandem but value stocks outperformed – they were cheaper and no one owned them," he says. "The second is that global economic doomsayers are wrong and economic growth revives in the second half of the year.