Value investing has become something akin to the toy left on the shelf on boxing day. No one wants much to do with the investing strategy that made Warren Buffett a billionaire, but arguably has the least to offer in the current market environment.
For those unfamiliar, the basic philosophy of a value investor is finding (preferably) quality companies that for any number of reasons have been under-appreciated by the market and left with a price that doesn't reflect the stock's true value.
Unlike growth investors, value investors hate euphoric markets and love a good market crash (more quality companies go on sale).
Here are two ASX options to consider for a value investor this week.
Costa Group Holdings Ltd (ASX: CGC)
Costa is Australia's largest horticultural company and a major supplier of fruits, berries and mushrooms. Costa's share price has been bulldozed this year – CGC shares started 2019 at $7.18 but closed last Friday at a price of $4.14 (a YTD fall of 42%). Costa has been hit by numerous production issues, including low-quality harvests, natural disasters and pricing pressures. However, I think this may present a rare value opportunity, as I think many of Costa's issues are temporary and not structural. I also don't believe demand for fresh fruit and vegetables is going away, therefore Costa may present a good long-term value play.
Vanguard Australian Shares Index ETF (ASX: VAS)
This one is for all those value investors that can't find any value out there (which I can't blame you for). If no pricing opportunities are presenting themselves, I believe that the next best option is increasing your cash position (all good things must come to an end, after all). If you already have a significant cash reserve, a dollar-cost-averaged position in a market-wide ETF would be another option to consider. VAS would fit this bill nicely, covering the top 300 companies on the ASX and also paying a dividend yield of about 4% on current prices. If you can't find any standout ASX companies at a good price, you may as well just buy them all.
Foolish takeaway
I know it's a tough time to be a value investor, but value investing has shown itself to be a quality long-term strategy and one that shouldn't be abandoned just because markets are high. Accumulating cash and reducing your exposure to the markets might be a prudent move in these times – that's what Mr Buffett is doing anyway.
