The Resurgence of Value Investing: A Quality-Driven Opportunity in a Volatile Market

The investment landscape in 2025 is defined by volatility, shifting macroeconomic currents, and a recalibration of long-standing market dynamics. For years, growth stocks—particularly those in the technology sector—dominated portfolios, buoyed by low bond yields and a post-pandemic surge in speculative demand. However, recent data suggests a structural shift: value investing is staging a comeback, driven by rising interest rates, geopolitical tensions, and a reevaluation of risk premiums. This resurgence is not a fleeting anomaly but a strategic opportunity for investors who prioritize quality, fundamentals, and long-term resilience.

The Market’s Great Rebalancing

According to a report by S&P Global Market Intelligence, value stocks returned 16.10% in the first quarter of 2025, outperforming growth equities by a margin of nearly 8 percentage points [3]. This reversal coincided with a sharp rise in bond yields, which had long disadvantaged value stocks by making future earnings less valuable in present terms. As the Federal Reserve’s rate hikes began to normalize borrowing costs, the valuation gap between value and growth narrowed. “The long downtrend in bond yields that favored growth stocks is reversing,” notes Invesco’s 2025 market analysis, adding that value strategies are now better positioned to capitalize on early-cycle economic upswings [4].

Academic research further supports this trend. A 2023 study using wavelet analysis found that growth stocks exhibited stronger persistence in returns during periods of low volatility but faltered when uncertainty spiked [5]. By contrast, value stocks—historically undervalued due to temporary earnings declines or sector-specific challenges—have shown greater resilience in 2025, particularly in sectors like industrials, energy, and consumer staples.

High-Quality Value Stocks: A Closer Look

While the broader trend is compelling, the true opportunity lies in identifying high-quality value stocks with robust fundamentals and attractive valuations. These companies are not merely cheap but possess durable competitive advantages, strong balance sheets, and improving earnings trajectories.

1. Campbell Soup Company (CPB)
   Morningstar analysts estimate Campbell’s intrinsic value at $62 per share, yet the stock trades at a 38% discount to this figure [1]. The company’s cost advantages in the packaged foods sector, coupled with its focus on premium brands like Bolthouse Farms and Plum Organics, position it to outperform in a high-inflation environment. Its fiscal 2028 cost-savings targets further enhance its margin resilience.

2. GSK (GSK)
   The pharmaceutical giant trades at a 37% discount to its $58 fair value estimate, according to Morningstar [1]. GSK’s diverse drug portfolio, including its recent expansion into emerging markets, provides a buffer against R&D risks. Its strong cash flow generation and dividend yield of 3.2% make it a compelling value play in a sector often overlooked by growth-focused investors.

3. Berkshire Hathaway (BRK.A, BRK.B)
   Despite its reputation as a growth-oriented conglomerate, Berkshire Hathaway fits the value mold under Warren Buffett’s disciplined capital allocation. With a P/B ratio of 1.2 and a portfolio of undervalued subsidiaries, the company is well-positioned to capitalize on strategic acquisitions in a higher-rate environment [2]. Greg Abel’s leadership has maintained Buffett’s value-driven ethos, ensuring continuity in its investment strategy.

4. General Motors (GM)
   GM’s P/E ratio of 6.8 is among the lowest in the S&P 500, reflecting its undervaluation despite strong cash flow prospects [2]. The automaker’s pivot to electric vehicles and its robust supply chain infrastructure in the Sun Belt region provide long-term tailwinds. While trade policy risks persist, GM’s balance sheet—boasting $30 billion in liquidity—offers a margin of safety.

5. Energy Transfer LP (ET)
   This midstream energy infrastructure firm offers a 7.39% dividend yield and trades at a 40% discount to its 2024 earnings estimates [6]. With North America’s energy transition creating sustained demand for transportation and storage, Energy Transfer’s fee-based revenue model insulates it from commodity price swings, making it a rare value play in the energy sector.

Navigating Volatility: Strategies for Success

The resurgence of value investing does not negate the need for caution. Volatility remains a defining feature of 2025 markets, with trade tensions and inflationary pressures creating headwinds. Investors should adopt a diversified approach, blending value stocks with low-volatility equities and defensive sectors. For instance, the low-volatility factor outperformed during the March 2025 selloff, as noted by Morningstar [3], underscoring the importance of risk-adjusted returns.

Factor investing—targeting characteristics like quality, momentum, and profitability—can further refine value strategies. However, as Wellington Management cautions, “The line between value and growth is blurring. Structural trends like AI and supply chain resilience require a nuanced, fundamentals-driven approach” [2].

Conclusion

The 2025 market environment is a crossroads for value investing. While growth stocks remain influential, the shift in macroeconomic conditions has created fertile ground for value strategies that prioritize quality and resilience. By focusing on companies like Campbell’s, GSK, and Energy Transfer LP, investors can harness the power of undervaluation while mitigating the risks of volatility. As bond yields stabilize and economic cycles evolve, the key to long-term success lies in marrying rigorous fundamental analysis with strategic adaptability.

Source:
[1] 10 Best Value Stocks to Invest in for the Long Term [https://global.morningstar.com/en-gb/stocks/10-best-us-value-stocks-buy-long-term]
[2] 4 Best Value Stocks to Buy in 2025 [https://www.fool.com/investing/stock-market/types-of-stocks/value-stocks/]
[3] The Stock Strategies That Are Paying Off in 2025 [https://www.morningstar.com/markets/stock-strategies-that-are-paying-off-2025]
[4] Value versus growth: Is it time for value? [https://www.invesco.com/uk/en/insights/value-versus-growth-time-for-value.html]
[5] Growth vs value investing: Persistence and time trend ... [https://www.sciencedirect.com/science/article/abs/pii/S0275531923001101]
[6] 5 Best Stocks To Buy Now For August 2025 [https://www.forbes.com/sites/investor-hub/article/best-stocks-buy-now-august-2025/]