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Welcome to Episode #138 of the Value Investor Podcast
Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio, shares some of her top value investing tips and stock picks.
The technology stocks are hitting new highs again but, strangely enough, so are some of the “old economy” stocks, such as those in manufacturing, chemicals and the railroads.
That’s a good sign for this rally but investors who are over weighted in technology should really think about diversifying their portfolio.
For example, Apple (AAPL - Free Report) has been a great performer over the last 10 years even as it has been among the cheaper of the big technology companies. Shares are up over 1200% since 2009.
Apple used to trade around 10x and is now trading with a forward P/E of 18.3. It’s simply not that cheap of a stock anymore.
But what about the old economy stocks?
Are any of them still values?
Screening for Cheap Old Economy Stocks
There’s no easy way to screen for “old economy” stocks as that really isn’t a segment of the stock market, per say. There’s no good definition about what that means.
But you can run a screen which includes the Zacks Rank of #1 (Strong Buy) and #2 (Buy), in order to get stocks with rising earnings estimates, and then use a value fundamental like a P/E under 15.
In order to get the “old economy” part though, you will have to screen using different sectors or industries.
For this screen, different sectors were added to find cheap stocks. They may not all have been “old economy” though and a couple of Tracey’s favorites didn’t make the screen.
For instance, Crane (CR - Free Report) is cheap enough, with a forward P/E of just 13.9, but it’s a Zacks Rank #4 (Sell) right now as it hasn’t reported earnings yet. With that Zacks Rank, it couldn’t make the screen.
Still, the number of stocks that came through this screen when it was run for various sectors, was small.
Here are three that made the cut.
3 Value Stocks for Your Investing Short List
1. H&E Equipment Services (HEES - Free Report) has a forward P/E of just 12.8. The equipment rental company has a market cap of just $1 billion but it pays a dividend currently yielding 3.8%. Shares are up 46% year-to-date already. It’s about to report earnings, so tune in.
2. Macquarie Infrastructure Co is cheap, with a forward P/E of just 8.5. But you’re really buying in for the juicy dividend, which currently yields 9.7%. Macquarie reports earnings on May 1.
3. Norwegian Cruise Line Holdings (NCLH - Free Report) has rallied 34% to start the year. Yet it still has a forward P/E of 10.6, which is well below the average of the S&P 500 which is 17x. It hasn’t yet reported earnings either so investors should tune in.
Remember, the Zacks Rank will be volatile during earnings season as the analysts adjust their earnings estimates.
These screens should be run multiple times during earnings season as the Rank will be changing.
But the screens didn’t really reveal any of the hot old economy stocks that everyone is talking about, like the railroads.
Why not?
Are the old economy stocks just not cheap enough right now?
Like technology, are they overbought too?
Tune in to find out.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +98%, +119% and +164% in as little as 1 month. The stocks in this report could perform even better.
Image: Bigstock
How to Screen for Cheap Old Economy Stocks
Welcome to Episode #138 of the Value Investor Podcast
Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio, shares some of her top value investing tips and stock picks.
The technology stocks are hitting new highs again but, strangely enough, so are some of the “old economy” stocks, such as those in manufacturing, chemicals and the railroads.
That’s a good sign for this rally but investors who are over weighted in technology should really think about diversifying their portfolio.
For example, Apple (AAPL - Free Report) has been a great performer over the last 10 years even as it has been among the cheaper of the big technology companies. Shares are up over 1200% since 2009.
Apple used to trade around 10x and is now trading with a forward P/E of 18.3. It’s simply not that cheap of a stock anymore.
But what about the old economy stocks?
Are any of them still values?
Screening for Cheap Old Economy Stocks
There’s no easy way to screen for “old economy” stocks as that really isn’t a segment of the stock market, per say. There’s no good definition about what that means.
But you can run a screen which includes the Zacks Rank of #1 (Strong Buy) and #2 (Buy), in order to get stocks with rising earnings estimates, and then use a value fundamental like a P/E under 15.
In order to get the “old economy” part though, you will have to screen using different sectors or industries.
For this screen, different sectors were added to find cheap stocks. They may not all have been “old economy” though and a couple of Tracey’s favorites didn’t make the screen.
For instance, Crane (CR - Free Report) is cheap enough, with a forward P/E of just 13.9, but it’s a Zacks Rank #4 (Sell) right now as it hasn’t reported earnings yet. With that Zacks Rank, it couldn’t make the screen.
Still, the number of stocks that came through this screen when it was run for various sectors, was small.
Here are three that made the cut.
3 Value Stocks for Your Investing Short List
1. H&E Equipment Services (HEES - Free Report) has a forward P/E of just 12.8. The equipment rental company has a market cap of just $1 billion but it pays a dividend currently yielding 3.8%. Shares are up 46% year-to-date already. It’s about to report earnings, so tune in.
2. Macquarie Infrastructure Co is cheap, with a forward P/E of just 8.5. But you’re really buying in for the juicy dividend, which currently yields 9.7%. Macquarie reports earnings on May 1.
3. Norwegian Cruise Line Holdings (NCLH - Free Report) has rallied 34% to start the year. Yet it still has a forward P/E of 10.6, which is well below the average of the S&P 500 which is 17x. It hasn’t yet reported earnings either so investors should tune in.
Remember, the Zacks Rank will be volatile during earnings season as the analysts adjust their earnings estimates.
These screens should be run multiple times during earnings season as the Rank will be changing.
But the screens didn’t really reveal any of the hot old economy stocks that everyone is talking about, like the railroads.
Why not?
Are the old economy stocks just not cheap enough right now?
Like technology, are they overbought too?
Tune in to find out.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +98%, +119% and +164% in as little as 1 month. The stocks in this report could perform even better.
See these 7 breakthrough stocks now>>