What is a Value Stock?

Tracey Ryniec Published on May 09, 2019

(0:20) - What Are Value Stocks?
(3:10) - 3 Top Attributes of a Value Stock
(10:25) - Stock Screener and Tracey’s Top Stock Picks
(15:20) - Episode Roundup: AMZN, C, CVS, LNC
Podcast@Zacks.com

Welcome to Episode #140 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.

Before this year’s Berkshire Hathaway annual meeting in Omaha, Warren Buffett announced that one of his lieutenants that invests for the Berkshire portfolio, had bought shares of Amazon (AMZN - Free Report) in the first quarter.

We don’t yet know how large the position is. Buffett reassured shareholders that his team is still following the value investing strategy.

But are they?

Benjamin Graham’s Keys to Finding Value Stocks

Investors should know what makes up an actual “value” stock.

It isn’t simply a cheap growth stock.

There are certain fundamentals that should be there in value stocks including a low P/E, 5-years of earnings growth, and a low Price-to-Book ratio.

Screening for some of Graham’s requirements produced a list of 11 stocks.

3 Value Stocks That Pay Dividends

1. Citigroup (C - Free Report) is cheap with just a forward P/E of 9. It pays a nice dividend yielding 2.6%. It also has earnings growth, with a PEG ratio of 0.7.

2. CVS (CVS - Free Report) shares have sunk as investors have fled the healthcare stocks on worries about Medicare-for-all. CVS now owns Aetna, one of the largest health insurers. It’s also cheap, with a forward P/E of 8.1. It pays a dividend of 2%.

3. Lincoln National (LNC - Free Report) sells life insurance, handles employee benefits, and does wealth management. It has a forward P/E of just 7. Lincoln pays a dividend with a yield of 1.3%.

What else should you know about what makes a value stock?

Listen to this week’s podcast 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>>

Zacks Names "Single Best Pick to Double"

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.

This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.