I’m a child of the ‘80s.

I still remember the iconic Miller Lite beer commercials in which rival crowds would insist the beer either “tastes great!” or is “less filling!”

They looked like two armies ready to go to war!

The investing world can feel like that sometimes.

In one corner, you have the “value crowd” that insists there’s a right price for every stock and that growth stocks are fads destined to disappoint.

In the other corner, the “growth crowd” looks for the next big thing while calling value investors a bunch of old fuddy-duddies.

This was always silly to me. Why be ideological about it? Can’t a beer taste great and be less filling?

Why Fight?

Value investing works. The data proves it.

Growth investing works, too. The data proves that as well.

This is why I include both value and growth factors in my proprietary Green Zone Ratings model.

This was on my mind as I tracked the performance of the Vanguard Growth Index Fund ETF(NYSE: VUG) and Vanguard Value Index Fund ETF (NYSE: VTV) this week.

Growth stocks have been in favor since the bottom of the 2008 bear market. But value looks solid these days.

Over the past year, VTV (the green line in the chart above) outperformed VUG, the red line.

I’m a trader at heart, and I try to approach each trade with an open mind and no bias. I don’t go in looking for a value trade or a growth trade. I look for a profitable trade, wherever it might be.

Today, value stocks show more momentum than growth stocks, so it makes sense to pay special attention to our value factor.

I wrote last week that commodities were ripping higher due to the “inflation trade.”

This also has a value angle. Apart from the commodities themselves, the stocks of companies that produce commodities, including energy, are cheap and have rallied in recent months.

As an example, let’s take a look at one of the most iconic companies in American history: Exxon Mobil Corp. (NYSE: XOM).

Bullish on Value AND Growth: Exxon Mobil

Exxon Mobil stock rating 11422

Exxon Mobil Corp.’s Green Zone Rating on January 14, 2022.

Exxon has pushed higher since late December, and based on its Green Zone Rating, I expect that to continue. XOM rates a “Bullish” 70 in my proprietary model. And it rates well across all but one of my six factors.

Volatility Exxon Mobil rates an 88 on my volatility factor, meaning it’s less volatile than all but 12% of the stocks in our universe. That’s excellent. I wouldn’t  be surprised if we see a correction in 2022 as the market deals with rising interest rates and inflation woes, but XOM should hold up well in that scenario.

Value Exxon Mobil’s value rating is solid at 75. Energy stocks were left for dead last year, and we’re still benefiting from that pricing today. If value stocks continue to outperform growth, I’d expect XOM to participate in that.

Momentum Energy is gaining steam. Exxon Mobil’s 72 rating on momentum is proof of that. And that momentum seems to be accelerating if the last month is any indication. XOM has gained around 16% since the middle of December!

Quality We measure quality via profitability and balance sheet strength. Exxon Mobil rates a respectable 65 here. That’s remarkable considering how difficult the past several years have been for the energy industry. The fact that Exxon managed to maintain competitive profit margins during a major, long-term bear market in energy shows what a high-quality business it is.

Growth Exxon Mobil is not a growth stock. Energy is a mature business under constant pressure from new alternatives like wind and solar. That said, it still rates a 62 on our growth factor. Returning to the “taste great, less filling” theme, XOM can at least hold its own in both camps!

Size Exxon Mobil is massive, with a market capitalization (outstanding shares times current share price) of $300 billion. That’s enough to drag its size factor score down to 1. That’s OK. Every portfolio needs a few established players.

Bottom line: I can’t tell you if value will continue to dominate growth. But, as a trader, it seems that value is the place to be.

And XOM is a solid stock to play this trend now.

To good profits,

Adam O’Dell

Chief Investment Strategist