Barron Weekly selected 13 stocks favored by both growth and value investors at cheap valuations and expected profits to grow faster than the average index in 2021 and beyond.

The week before last week, US stocks suddenly fell back from record highs. Technology stocks, which had been rising, fell the most, while sectors such as finance and industry, which had been lagging behind, outperformed the market, looking like a cycle from growth stocks to value stocks.

Many investors believe that companies that are more sensitive to economic recovery and have lower valuations now have better prospects than growth companies with expensive stock prices. Other investors believe that the possibility of a second outbreak and low interest rates are still better for growth stocks. Time will tell which view is correct.

However, investors can also consider combining these two strategies. Barron Weekly screened out some stocks favored by both growth and value investors, that is, cheap by a key indicator, but profits are expected to grow faster than the average index in 2021 and longer.

Barron Weekly first selected 399 companies from the S & P 500, which Wall Street expects to see positive earnings per share over the next five years. The next selection criterion is that these companies must be able to benefit from the economic recovery driven by the development of the vaccine, and there are 78 such companies that expect earnings per share to grow by at least 30% in 2021. The final selection criterion is that the valuation should not be too high and the price-to-cash ratio (that is, the ratio of share price to cash flow per share) should be less than 15 times.

Barron Weekly finally selected 13 stocks, about half of which were financial stocks.

Insurance company Chubb (CB), reinsurance company Everest RE Group (RE) and insurance company W.R. Berkley (WRB) are on the list. But regardless of the economic situation, insurers are generally undervalued.

Bank of America Corporation (Bank of America, BAC) and Wells Fargo & Co (Wells Fargo, WFC) may be more attractive, as well as consumer lenders Discover Financial Services (DFS) and Capital one Finance (Capital One Financial, COF). The businesses of these companies are closely related to the health of the US economy, and share prices should be boosted if the economy recovers next year. Analysts believe these companies will also continue to grow in the long run. Their valuations are very attractive in the highly valued US stock market.

Deere, DE, a maker of agricultural heavy equipment, will also do well when farmers' livelihoods get better. Although commodity prices have fallen sharply this year, they are expected to rise next year.

The only tech stock on the list is Corning (GLW), which makes glass for fiber-optic cables and electronic screens. The stock market now trades at 10.4 times (lower than the valuations of many technology stocks), and earnings per share are expected to grow by nearly 5% a year over the next five years, including 44.5% in 2021.

Three oil and gas stocks, Diamondback Energy (FANG), Pioneer Natural Resources (PXD) and Valero Energy (VLO), are also on the list. Oil prices plummeted in 2020, and energy stocks were the hardest hit in the stock market. There are many stocks with low valuations in this sector, but growth companies are very rare. However, such stocks are not suitable for more cautious investors.

Commercial real estate service provider CBRE Group CBRE was also selected. Although the COVID-19 epidemic has dealt a heavy blow to the commercial real estate market, companies providing services in this area have performed better, and many of these companies will return to normal once the epidemic subsides. CBRE brings a cheap entry point for investors, and more cautious investors can also consider it.