The concept of buying "value" stocks is simple on the surface. If you can find a stock trading for less than it's worth, it stands to reason that the price of each share will eventually climb to reflect its true value.

Sometimes, the discount reflected in these stocks is clear. But more often than not, it takes a sharp investor to recognize value where others fail to see it. So we asked three top Motley Fool contributors each to discuss a value stock that they believe "sharp" investors can appreciate. Read on to see why they chose Chipotle Mexican Grill (CMG -1.47%), Ensco plc (VAL), and Kroger (KR 0.63%)

Detective looking through a magnifying glass.


This turnaround is just getting started

Steve Symington (Chipotle Mexican Grill): Chipotle might not look like a "value stock" trading at 128 times trailing 12-month earnings. But with its turnaround progressing well -- and especially after shares pulled back earlier this week after Chipotle reiterated its full-year guidance but noted marketing and promotion costs would climb 0.2 to 0.3 percentage points from last quarter -- shares of the fast-casual burrito specialist are much more attractive looking forward at around 35 times this year's expected earnings.

For perspective, comparable-restaurant sales climbed 17.8% year over year last quarter -- albeit as it lapped a painful performance in the same year-ago period following multiple food-borne illness scares -- driven by improved traffic, lower promotional activity, and higher average checks. On the bottom line, Chipotle swung from a $26.4 million net loss in last year's first quarter to net income of $46.1 million, or $1.60 per share to start this year. All the while, Chipotle continued to grow its physical base, opening 57 new locations to end the quarter at 2,291 restaurants. That left it on pace to meet its goal of opening 195 to 210 new restaurants this year. 

During the subsequent conference call, CEO Steve Ells credited Chipotle's improvements to "sweeping changes throughout the organization, nearly all of which are aimed at dramatically improving the guest experience."

In retrospect, that shouldn't have come as a huge surprise considering signs Chipotle had started to win back diners' trust earlier this year. But that's also what makes it an intriguing value stock for "sharp" investors -- the writing on the wall indicates that Chipotle's business has momentum on its side. And I can't blame the company for spending a little more to keep diners coming back. For those who recognize this and buy shares before that momentum becomes even more evident, I think Chipotle stock has plenty of room to rise from here.

It's going to take time to play out, but these assets are fire-sale priced

Jason Hall (ENSCO PLC): Offshore drilling is in the midst of what has turned out to be the worst downturn in the history of the industry. Even though oil stocks have recovered from their bottom in 2016, a stubbornly high supply of global oil has continued to keep crude from really rebounding. That, in turn, has kept producers from committing to new offshore investments. 

But there are some signs that this is starting to change. So far this year, there have been a number of awards for offshore work, both for new drilling activity and extensions of existing contracts for vessels. However, even with this increase in "shopping" from offshore producers, nearly all of this newly awarded business is for activity that starts in 2018, or even beyond. But this new activity has 2018 looking like the year offshore starts to recover, and that makes ENSCO worth buying today.

The company's recent move to acquire Atwood Oceanics further cements ENSCO as a company worth owning at this point. Adding Atwood's high-specification fleet to ENSCO's will set the company up very well for the offshore recovery. 

Trading at barely over 20% of the book value of its assets, ENSCO is dirt cheap, even when factoring in the likelihood that it scraps some of its older vessels. As offshore drilling recovers in coming years, ENSCO is almost certainly going to start trading at a much higher valuation, making today's price an excellent value for investors who can wait it out. 

The news of its death is greatly exaggerated

Chuck Saletta (Kroger): The recent news that is buying Whole Foods Market sent shockwaves through the grocery business. Kroger (KR 0.63%), a current domestic titan of that industry, got hit particularly hard, falling nearly 10% on the news. 

Certainly, is a deep-pocketed and formidable competitor that has a tendency to disrupt industries, but Kroger has faced down stiff competition before and emerged stronger as a result. While competitive pricing is one aspect of Kroger's success -- and the one that's getting the most current attention -- the reality is that Kroger wins on a combination of quality, service, and price. Kroger also has the scale and size to remain competitive, with over $115 billion in annual chainwide revenues. 

Thanks to the market's sell-off, Kroger's shares are available in the market for around 10 times the company's expected earnings. That's a price tag that anticipates virtually no growth going forward. While it's absolutely true that competition will be fierce, sharp investors looking for value stocks should realize that, if there's an industry shakeout, the smaller and weaker players are likely to get hit the hardest. That leaves more market share for surviving players, ultimately providing growth for those that remain.

While the market may not recognize it at the moment,'s purchase of Whole Foods shows that physical retail still has a future, particularly in the grocery business. Once you recognize that people will still be headed to their local stores, it's not too large a leap of faith to realize that strong, established players with great existing footprints still have room to compete.

Even with Amazon's entry into the grocery business, there's room in the market for more than one retailer. I do expect more consolidation in the industry and the potential for weaker players to be forced out, but with its size, scale, and know-how, Kroger is well positioned to be one of the survivors.

Sharp investors with long-term time horizons and a value focus might just find that Kroger's recent sell-off gives them the opportunity to buy in at a reasonable bargain price.