It has been a volatile first two weeks of May 2021 in the stock market, including new all-time highs for the S&P 500 and a major drop of -4% last Wednesday. Both Value and Growth stocks struggled with the fears around supply squeezes and rising inflation. On Wednesday, the (US) Labor Department reported that the consumer price index (CPI) rose 0.8% in April, and 4.2% year-on-year, the fastest pace since 2008, excluding food and energy, the core CPI increased 0.9% in April.
Pressures on Growth stocks
Growth stocks struggle in the first months of 2021 on concerns that rising long-term interest rates will impact the profits of those fast-growing companies. Investors are also turning from Growth to Value stocks that will probably do well once the economy opens up after COVID-19. Year-to-date the iShares S&P 500 Growth ETF (IVW) is more than 10% behind the performance of the S&P 500 Value ETF (IVE).
It is not surprising that the Dividend Aristocrats index (NOBL) with “loads of Value stocks” is close to the performance of S&P 500 Value ETF.
Concerns on Value Stocks
Value stocks are now also under pressure, due to April’s high inflation (CPI) of 4.2%. Analysts often state that inflation between 2% and 3% is not hurting value stocks in the long run. However, above the 3% range, labor costs could impact the profitability of the values stocks as well.
Wallstreet analysts still see potential
The following dividend aristocrats still have upside potential based on their one-year price target according to Wall Street’s analysts:
To see all dividend aristocrats and their latest data, please use the Dividend aristocrats price target screener to see all and see which dividend aristocrats have upside potential.