It might seem that valuation is no longer important for investors. Stocks that have sky-high valuation metrics continue to soar. Value stocks have lagged well behind growth stocks in recent years.
Stock valuations still matter, though. Sooner or later, stocks with attractive valuations will enjoy their time in the limelight. I predict these could be the three best-performing value stocks through 2030.
1. D.R. Horton
D.R. Horton (DHI 2.54%) is the largest homebuilder in the U.S. based on volume -- a status it's held since 2002. The company operates in 36 states. It closed on 93,660 homes in its last fiscal year giving D.R. Horton a market share of around 14% for U.S. single-family new homes.
NYSE: DHI
Key Data Points
Although its share price has jumped more than 160% higher over the last five years, D.R. Horton remains attractively valued. The stock trades below 9.9 times forward earnings. Its price-to-earnings-to-growth (PEG) ratio based on five-year earnings growth projections is a super-low 0.52, according to financial infrastructure and data provider LSEG.
I think D.R. Horton's growth prospects should be exceptionally strong throughout the rest of the decade. The U.S. continues to face a severe housing shortage that can only be resolved by the construction of new homes.
D.R. Horton's biggest challenge is relatively high mortgage rates and building materials costs making new homes too expensive for some families. The company has managed these issues pretty well so far, though. If rates and/or building costs decline even moderately, this stock should be a huge winner.
2. Moderna
Moderna (MRNA 4.54%) became practically a household name during the COVID-19 pandemic. The company was one of the leaders in developing then marketing a COVID-19 vaccine. Moderna's startling speed in developing the vaccine was due to its pioneering work in messenger RNA (mRNA) vaccine and therapy development.
NASDAQ: MRNA
Key Data Points
However, Moderna's COVID-19 vaccine sales have plunged over the last few years. The positive side effect of this sell-off is that the mRNA innovator's stock is now arguably a bargain. Moderna's shares trade at around seven times forward earnings. Its enterprise value of roughly $10.7 billion is roughly 3.6 times expected 2025 sales. That's cheap no matter how you look at it.
I think the worst of Moderna's COVID-19 vaccine sales slump is over. The company also now has a second approved product on the market, respiratory syncytial virus vaccine (RSV) mResvia, that could generate peak annual sales of around $1.5 billion.
Investors appear to be dismissing the potential for Moderna's pipeline. I think that's a mistake. Moderna anticipates 10 product approvals through 2027. If the company comes anywhere close to that goal, it should generate significantly greater sales by the end of the decade.
3. Pfizer
Pfizer (PFE 1.61%) was the only drugmaker to beat Moderna to market in the U.S. with a COVID-19 vaccine. The big pharmaceutical company also sells many other products, including therapies for autoimmune diseases, cancer, migraine, and more.
NYSE: PFE
Key Data Points
Like Moderna, Pfizer has seen a steep decline in COVID-19 vaccine sales. It also faces the loss of patent protection for several of its top-selling drugs over the next few years. Because of these issues, its stock trades at under nine times forward earnings.
However, Pfizer's growth prospects could be better than many think. The company has invested heavily in internal research and development and made multiple key acquisitions. Those efforts have added several rising stars to Pfizer's lineup, including RSV vaccine Abrysvo, migraine therapy Nurtec ODT, and cancer drugs Adcetris and Padcev.
Pfizer also has a nice head start on delivering a double-digit percentage total return thanks to its dividend. The company's forward dividend yield currently stands at 6.4%.
