Could tax reform boost value stocks?

2018 outlook: A drop in the corporate tax rate could help create jobs and grow wages

Time to read: 2 min

As 2017 nears its end, US value stocks are mired in their longest stretch of underperformance versus growth stocks since the Great Depression, held back by low interest rates and easy monetary policy. In my view, the top issue that will help determine whether that trend continues or abates is US tax reform.

In late September, Republicans unveiled their proposal, which addressed the repatriation tax, household taxation and corporate taxation.

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The math on E&P stocks doesn’t add up

CEOs and boards are focusing on the wrong metrics. But if they change their ways, the opportunity could be great.

Time to read: 3 min

In my more than 20 years in the investment business, I have seen many companies and industries lose their focus and discipline for a variety of reasons. Today, the exploration and production (E&P) sector fits squarely into that category. The compensation plans laid out by E&P corporate boards encourage these companies to grow production at almost any cost — which builds the personal net worth of the chief executive officers (CEOs), but does nothing for the shareholders for whom they are legally fiduciaries.

There are actions that boards and CEOs can take to rectify this situation, however. In my view, such changes could present a unique opportunity for the E&P sector to generate returns not only above current levels, but higher than their historical norms.

As a value investor, I know

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Financials and energy: Have value investors missed the boat?

Post-election excitement is rising, but valuations continue to signal opportunity

Kevin HoltBeing a deep value investor can be a lonely endeavor. We crunch the numbers to find unloved companies that we believe have bright futures ahead — years ahead, in many cases. But if you wait long enough, market sentiment can shift and your previously unloved holdings may suddenly appear on everyone’s radar screen. That’s exactly what the deep value Invesco Comstock Fund is experiencing right now. But it’s not just two or three names that have recently gained investors’ attention; more than half of the portfolio has been pushed into the spotlight following the election of President Donald Trump.

That’s because

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US value stocks: Investing in an interconnected world

2017 Investment Outlook series

Kevin HoltWhile 2016 turned out to be a decent year for US equities, with the S&P 500 Index returning 5.87% as of Oct. 31, 2016,1 we witnessed historically high volatility that illustrates the interconnectedness of global markets.

• To start the year, we saw a market plunge in China so severe that it caused market circuit breakers to kick in for the first time.

• At mid-year, the UK’s “Brexit” decision to leave the European Union (EU) shocked the world.

• And at the end of the year, US voters concluded a controversial election season by choosing a Republican president and Republican Congress. While the process was tumultuous, this potentially has the ability to be a game changer in that market-friendly actions (less regulation, lower taxes and repatriation of US dollars held offshore) by the new administration are a real possibility.

Finding opportunity in energy and financials

From a sector perspective,

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