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Can Value Investors Own Facebook?

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  • (0:45) - Gary Smith's Book, Money Machine
  • (3:00) - Is Investing In Just Value Dangerous?
  • (6:30) - Value & Growth Stock Screener
  • (7:25) - Tracey's Top Stock Picks
  • (10:30) - Episode Round Up: Podcast@Zacks.com

Welcome to Episode #38 of the Value Investor Podcast

Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio service, shares some of her top value investing tips and stock picks.

Recently, she came across a review of a new value investing book which argues that value is the most successful investing strategy.

Tracey has done podcasts talking about the excellent performance of small cap value stocks, even compared to growth, over the long term. You can listen to one of those podcasts below.

But value investing can also under perform for years, as we’ve seen the last few years.  Unless you’re Warren Buffett, most investors would probably be better served by having a more diverse portfolio that is made up of some value and some growth. It’s similar to owning more than just the large caps. It spreads out the risk.

Can Value Investors Own Facebook?

For those that follow Tracey on Twitter or Stocktwits, you already know that she owns Facebook in her personal portfolio. But how could that be when Facebook has never been a value stock?

She admits that she likes to own some high growth names. In the same portfolio that she owns Facebook, she also owns the Vanguard Small Cap Value ETR (VBR). She is getting her value exposure mixed with some growth.

Tracey’s advice: Don’t feel guilty for wanting to own some growth companies.

Tracey recommends investors seek out the strongest companies, whether those are value or growth, to invest in. Buy the best.

The Rare Combination of Value and Growth

Investors can also always seek out those companies which are both value plays and seeing strong earnings growth. This is a rare combination, but it does occur.

This way, those who have an itch for growth can scratch it without feeling like they are betraying their value fundamentals.

There are several great value and growth companies available right now, all with Zacks Ranks of #1 (Strong Buy) or #2 (Buy) which means rising earnings estimates.

4 Value Stocks with High Growth

1.      Bank of America (BAC - Free Report) , one of the largest American banks, has a forward P/E of 12.9 and is expected to grow earnings by 17.7% this year.

2.     Huntsman Corporation (HUN - Free Report) , the chemical maker, has a forward P/E of 12.7 and is expected to grow earnings by 18.3%.

3.     Royal Caribbean (RCL - Free Report) , the cruise provider, has a forward P/E of 13.7 and is forecast to grow earnings by 15.5%.

4.     Pilgrim’s Pride (PPC - Free Report) , the largest chicken producer in the United States, is trading with a forward P/E of just 11 and is expected to grow earnings by 20.2% in 2017.

What else should value investors know about growth stocks?

Tune into this week’s podcast to find out.

Want more value investing insights from Tracey?

Check out her weekly Value Investor service to receive more in-depth analysis on value companies and see which stocks Tracey thinks are the best bargains now.

It holds between 20 and 25 value stocks for the long haul.

Click here to learn more.