- (0:45) - What It Takes To Be A Value Investor During A Growth Market
- (8:30) - The Ignored FANG Companies
- (11:55) - Tracey’s Top Stock Picks
- (17:30) - Episode Roundup: FB, GOOGL, NFLX, INTC, PHM, NTR, MOS, ANDE, CF
Welcome to Episode #204 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.
With the growth investors still riding this bull market to new highs, it may seem impossible to find any value at all.
But there can be stocks right in front of you that have “value.”
Remember, value doesn’t have to mean classic value with a low P/E or PEG ratio. It can also mean relative value, which is that a company is cheaper than its peers.
Are Any of the FAANG Stocks a Value?
Let’s take a look at the FAANG stocks. You would think, given that they’ve all hit new highs in 2020, that they would certainly not be value stocks.
But two of them, Facebook (FB - Free Report) and Alphabet (GOOGL - Free Report) , have been out of favor with investors over the last several years. Returns on those two companies have lagged the others.
Facebook has been virtually ignored by many investors for years as the company has had issues with privacy and now with monitoring its site ahead of the November 2020 election.
Alphabet has seen its revenue get hit by the coronavirus pandemic as advertising has been cut by many companies. But Alphabet is trading with a P/S ratio of 6.8. Netflix, by comparison, is trading at 11.2x.
Could Facebook and Alphabet be relative values?
Look for Ignored Stocks and Industries
Another way to find value is to look for stocks in hot industries that are being ignored.
An example of that is Intel (INTC - Free Report) which is now out of favor due to the delay on its new chip. Shares sold off on the news over the summer. But it has a forward P/E of just 10.4.
Some industries are just being ignored altogether, including the agriculture sector and even housing, despite the hot housing market.
The home builders are in the top 1% of Ranked Industries. But they’re still cheap.
Pulte Group (PHM - Free Report) , one of the largest home builders in the nation, has a forward P/E of just 10.8. It also pays a dividend yielding 1%.
In agriculture, take a look at the fertilizer group. Fertilizer prices had been depressed the last few years but there’s a turnaround in the air. Prices are rising as the supply/demand dynamics tighten.
Nutrien (NTR - Free Report) , an agribusiness which produces potash, ammonia and nitrogen fertilizers, has launched a new digital business this year which has been more successful than anticipated. It’s trading with a forward P/E of 22, but pays a big dividend, yielding 4.8%.
What else should you know about finding value stocks during the growth boom?
Tune into this week’s podcast to find out.
[In full disclosure, the author of this article owns shares of FB and GOOGL in her personal portfolio.]
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