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Welcome to Episode #148 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.
Stocks continue to hit new all-time highs this year.
In the first six months of the year, the NASDAQ jumped 21%.
But what about value stocks? How are they doing in 2019?
Like we’ve seen over the past 2 years, they underperformed growth for the first six months.
The Vanguard Value Index ETF was up 14% while the Vanguard Growth Index ETF gained 22.9%.
What’s a value investor to do?
Berkshire Bought Amazon in 2019
Despite Warren Buffett’s insistence that his lieutenants were still value investors, the Berkshire Hathaway portfolio took a turn this year when it bought nearly $1 billion worth of Amazon (AMZN - Free Report) shares.
Unlike the purchase of Apple in 2016, there was no argument to be made that Amazon was a value stock by any classical definition such as P/E, P/S or PEG.
But perhaps the managers were tired of buying airline stocks, as the portfolio already owns four of those, or financials. Nearly half the Berkshire portfolio is now in financials, which are underperforming again.
Growth Stocks for Value Investors?
There’s nothing wrong with value investors diversifying their portfolios to include some growth.
There are no rules to investing in your own portfolio.
For instance, what about buying some big cap growth? Is there any value in any of the big cap FAANG names?
The Cheapest FAANG Stocks
1. On a P/E level, Apple (AAPL - Free Report) has been the cheapest of the FAANG stocks. But it’s not as cheap as it used to be. It now has a forward P/E of 17.3 and earnings are expected to fall 3.5% this fiscal year.
2. Alphabet (GOOGL - Free Report) is next cheapest with a forward P/E of just 23.7 and a Price-to-Book ratio of 4.1. Shares are up just 6.5% year-to-date.
3. Facebook also sports a moderate P/E ratio of just 27.2. But it has a price-to-book of 6.4 and a price-to-sales ratio of 9.4. But that’s cheaper than Netflix (NFLX - Free Report) which sports a P/B ratio of 28. Facebook shares have soared in 2019, up 48% year-to-date.
What other big cap growth stocks could value investors consider?
Tune into this week’s podcast to find out.
[In full disclosure, Tracey owns shares of FB, GOOGL, and AMZN in her personal portfolio.]
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Image: Bigstock
Why Warren Buffett's Berkshire Hathaway Had to Buy Amazon
Welcome to Episode #148 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.
Stocks continue to hit new all-time highs this year.
In the first six months of the year, the NASDAQ jumped 21%.
But what about value stocks? How are they doing in 2019?
Like we’ve seen over the past 2 years, they underperformed growth for the first six months.
The Vanguard Value Index ETF was up 14% while the Vanguard Growth Index ETF gained 22.9%.
What’s a value investor to do?
Berkshire Bought Amazon in 2019
Despite Warren Buffett’s insistence that his lieutenants were still value investors, the Berkshire Hathaway portfolio took a turn this year when it bought nearly $1 billion worth of Amazon (AMZN - Free Report) shares.
Unlike the purchase of Apple in 2016, there was no argument to be made that Amazon was a value stock by any classical definition such as P/E, P/S or PEG.
But perhaps the managers were tired of buying airline stocks, as the portfolio already owns four of those, or financials. Nearly half the Berkshire portfolio is now in financials, which are underperforming again.
Growth Stocks for Value Investors?
There’s nothing wrong with value investors diversifying their portfolios to include some growth.
There are no rules to investing in your own portfolio.
For instance, what about buying some big cap growth? Is there any value in any of the big cap FAANG names?
The Cheapest FAANG Stocks
1. On a P/E level, Apple (AAPL - Free Report) has been the cheapest of the FAANG stocks. But it’s not as cheap as it used to be. It now has a forward P/E of 17.3 and earnings are expected to fall 3.5% this fiscal year.
2. Alphabet (GOOGL - Free Report) is next cheapest with a forward P/E of just 23.7 and a Price-to-Book ratio of 4.1. Shares are up just 6.5% year-to-date.
3. Facebook also sports a moderate P/E ratio of just 27.2. But it has a price-to-book of 6.4 and a price-to-sales ratio of 9.4. But that’s cheaper than Netflix (NFLX - Free Report) which sports a P/B ratio of 28. Facebook shares have soared in 2019, up 48% year-to-date.
What other big cap growth stocks could value investors consider?
Tune into this week’s podcast to find out.
[In full disclosure, Tracey owns shares of FB, GOOGL, and AMZN in her personal portfolio.]
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>