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Welcome to Episode #47 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.
It’s not that hard to find cheap stocks. Anyone can screen for basic value fundamentals like a low P/E, PEG or Price-to-Book ratio.
But cheap stocks aren’t necessarily the best value stocks.
Tracey uses a “secret sauce” that allows her to find value stocks that have an edge.
What is it?
She looks for rising earnings estimates. After all, who wants to buy a company that is cutting its guidance or making less money this year than last year? Every investor, whether value or growth, should look for earnings growth. And if you want to add sales growth onto your screen, that is another great tool too.
Tracey screened for value stocks that also had earnings growth. Then she looked for earnings estimates that were being revised higher.
Which of these companies are among the best value stocks versus simply being cheap?
Best vs Cheap
1. Gilead (GILD - Free Report) , the biopharmaceutical giant, is cheap. It has a forward P/E of just 8.3. Shares have sunk 42% over the last 2 years, but that could mean this is a buying opportunity. What about its earnings?
2. Ichor Holding (ICHR - Free Report) went IPO in December 2016. It provides gas and chemical delivery systems for semiconductor process equipment. Its trading with a forward P/E of only 11.6. What about its earnings?
3. Applied Materials (AMAT - Free Report) is a semiconductor giant. It has an attractive forward P/E of just 14.3, which is well under the average of the S&P 500 which is about 19. What about its earnings?
4. M/I Homes (MHO - Free Report) is a small cap homebuilder based in Ohio. It’s got a forward P/E under 10, at 9.1. That’s rare in this market. What about its earnings?
Screening for value stocks should be just the first step for investors. But applying the “secret sauce” can give you an edge in narrowing down the choices.
Once you do that, you can do further research to really dig down into the companies to see what makes them tick.
What else should you know about finding the best value stocks?
Tune into this week’s podcast to find out.
Exclusive Buffett Report for Podcast Listeners
What 3 secrets drive the success of arguably the world's greatest value investor?
Which 5 stocks might he buy right now if he weren't already a billionaire?
Today, podcast listeners are invited to download Zacks' Special Report, Invest Like Warren Buffett for free. At the same time, you may also look inside Tracey’s Value Investor portfolio to see more stocks at exceptional "discounts."
Image: Bigstock
How to Find the Best Value Stocks
Welcome to Episode #47 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.
It’s not that hard to find cheap stocks. Anyone can screen for basic value fundamentals like a low P/E, PEG or Price-to-Book ratio.
But cheap stocks aren’t necessarily the best value stocks.
Tracey uses a “secret sauce” that allows her to find value stocks that have an edge.
What is it?
She looks for rising earnings estimates. After all, who wants to buy a company that is cutting its guidance or making less money this year than last year? Every investor, whether value or growth, should look for earnings growth. And if you want to add sales growth onto your screen, that is another great tool too.
Tracey screened for value stocks that also had earnings growth. Then she looked for earnings estimates that were being revised higher.
Which of these companies are among the best value stocks versus simply being cheap?
Best vs Cheap
1. Gilead (GILD - Free Report) , the biopharmaceutical giant, is cheap. It has a forward P/E of just 8.3. Shares have sunk 42% over the last 2 years, but that could mean this is a buying opportunity. What about its earnings?
2. Ichor Holding (ICHR - Free Report) went IPO in December 2016. It provides gas and chemical delivery systems for semiconductor process equipment. Its trading with a forward P/E of only 11.6. What about its earnings?
3. Applied Materials (AMAT - Free Report) is a semiconductor giant. It has an attractive forward P/E of just 14.3, which is well under the average of the S&P 500 which is about 19. What about its earnings?
4. M/I Homes (MHO - Free Report) is a small cap homebuilder based in Ohio. It’s got a forward P/E under 10, at 9.1. That’s rare in this market. What about its earnings?
Screening for value stocks should be just the first step for investors. But applying the “secret sauce” can give you an edge in narrowing down the choices.
Once you do that, you can do further research to really dig down into the companies to see what makes them tick.
What else should you know about finding the best value stocks?
Tune into this week’s podcast to find out.
Exclusive Buffett Report for Podcast Listeners
What 3 secrets drive the success of arguably the world's greatest value investor?
Which 5 stocks might he buy right now if he weren't already a billionaire?
Today, podcast listeners are invited to download Zacks' Special Report, Invest Like Warren Buffett for free. At the same time, you may also look inside Tracey’s Value Investor portfolio to see more stocks at exceptional "discounts."
Click to see them now >>