Investors are increasingly drawn to value stocks for their reliability and reasonable valuations. Amid the market volatility expected in 2025, companies like Berkshire Hathaway(NYSE:BRK-A)(NYSE:BRK-B), Allegion (ALLE), and American Electric Power (AEP) are showing strong performance against the benchmark S&P 500 (^GSPC). However, purchasing stocks solely based on short-term success can be risky.
Here’s why these three value stocks are poised for long-term growth and might be worth considering now.
Berkshire’s Long-Term Advantages
As of this writing, Berkshire Hathaway has risen 10.4% year-to-date, significantly outpacing the slight decline of the S&P 500. Under Warren Buffett’s leadership, Berkshire has grown into a company valued at over $1 trillion. With Greg Abel set to take over as CEO in late 2025, there’s potential for Berkshire to surpass a $2 trillion market cap while continuing to outperform the S&P 500.
Berkshire’s strength lies in its diverse portfolio of top dividend-paying stocks, including Apple, American Express, Coca-Cola, Bank of America, and Chevron. The company also holds a substantial cash reserve, allowing it to seize investment opportunities. More importantly, Berkshire is focusing on its controlled assets—insurance, energy, and various manufacturing sectors—which generate significant operating earnings.
These earnings can be reinvested or used to purchase public stocks, as Berkshire does not pay dividends but rather invests when it sees value.
Additionally, Berkshire earns investment income from its insurance float, which has ballooned to $173 billion as of March 31. Even with conservative investments, this could yield around $7 billion annually. These factors position Berkshire to grow its operating earnings for years to come.
Allegion: A Growing Security Player
Allegion, a company specializing in security products, has seen its stock rise 8.6% in 2025, contrasting with the S&P 500’s decline. This performance reflects Allegion’s long-term growth potential, driven by the integration of electronic and mechanical security systems and the increasing need for safety, particularly in institutional settings.
The demand for web-enabled locks and services is rising, offering building owners enhanced control and valuable workflow data. As urbanization leads to higher population densities—and often more crime—Allegion stands to benefit. The company also anticipates growth through mergers and acquisitions, contributing to an expected long-term growth rate of over 7%.
Management forecasts a shift to double-digit growth in earnings, with Wall Street analysts projecting earnings per share of $8.42 in 2026 and $675 million in free cash flow. Allegion’s valuation remains attractive at 16.7 times earnings and 18 times free cash flow.
American Electric Power: A Reliable Utility
While the S&P 500 has faced challenges, American Electric Power has risen over 11% this year. Its stock remains attractively valued, especially for those seeking stability and passive income, thanks to a forward dividend yield of 3.7%.
The S&P 500 has experienced significant fluctuations, prompting investors to seek safe investments like American Electric Power. As a regulated utility, the company doesn’t have the flexibility to raise rates at will, but it guarantees certain returns, making it appealing to conservative investors.
Management is targeting an annual total shareholder return of 10% to 12%, driven by earnings growth of 6% to 8% and a robust dividend yield. This low-risk business model provides a solid foundation for investors looking for stability amid market uncertainty.
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