For Immediate Release
Chicago, IL – September 10, 2020 – Zacks Market Edge is a podcast hosted weekly by Zacks Stock Strategist Tracey Ryniec. Every week, Tracey will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life. To listen to the podcast, click here: (https://www.zacks.com/stock/news/1055908/generation-x-investors-deja-vu)
Generation X Investors: Deja Vu?
Welcome to Episode #240 of the Zacks Market Edge Podcast.
Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.
This week, Tracey is going solo to talk about the summer stock market rally.
As a Generation Xer herself, this rally is beginning to have a sense of déjà vu with the late 1990s.
In 2000, the NASDAQ was coming off its best year of the decade, up 85.6%. Everyone was diving into technology, as they chased the returns of the past 5 years.
It was a new era of the Internet and dot coms. Everyone thought the innovation would go on forever. If you didn’t own tech in 2000, you were a loser.
Flash forward to 2020. Just before the pandemic, the NASDAQ was hot and hitting new highs in February. But then the coronavirus hit.
Off the March coronavirus lows, however, the NASDAQ rallied over 75% to another set of new all-time highs, until the recent 9% pullback.
Millions of new traders and investors have opened up accounts on trading apps like Robinhood.
In 1999, eTrade, which allowed you to trade cheaply online, was also adding millions of new accounts and traders.
What’s an Investor to Do Now?
Good investors have a diverse portfolio. They’re not just in technology.
Some industries have value and aren’t getting sold off as sharply right now as tech or the popular growth names.
Where should you look?
Big cap pharmaceuticals have underperformed this year and for the last 5 years. The industry is up just 52% over the last 5 years compared to a gain of 91.7% for the S&P 500.
Energy, value and small caps are also in the dog house.
Be a Contrarian
1. Merck (MRK - Free Report) is the only Zacks Rank #2 (Buy) stock in the large cap pharmaceutical group. There are NO Zacks Rank #1 (Strong Buys) right now. It’s expected to see earnings growth of 9.8% this year and another 4.2% next year. It’s trading with a forward P/E of just 15.
2. AbbVie (ABBV - Free Report) is one of the rare large cap drug makers expected to grow earnings by double digits this year and next thanks to its acquisition of Botox maker Allergan. Shares are cheap, with a forward P/E of just 8.8 and it pays a dividend yielding 5.1%.
3. Pioneer Natural Resources (PXD - Free Report) is an energy exploration and production company with one of the best balance sheets in the industry. It’s paying a dividend, currently yielding 2.2%, even with crude prices under $50. Pioneer is a Zacks Rank #2 (Buy) as 7 estimates were revised higher for 2020, and none lower, over the last 30 days. Is the worst over for the energy companies?
4. Vanguard Small-Cap Value ETF (VBR - Free Report) is still down 17% year-to-date even though it’s off its March coronavirus lows. But small cap value is still out of favor as this ETF was down 1.8% over the last month while the NASDAQ was soaring. Time for small cap value again?
5. Vanguard S&P Small Cap 600 ETF (VIOO - Free Report) hasn’t fallen as much in 2020 as the purely value small cap ETFs because it’s a mix of growth and value. It’s down “just” 12.9% year-to-date as the small caps are still out of favor. Industrials and technology are the two biggest sectors in this ETF. Is it time to add to your small cap positions?
What else should you know about investing during the NASDAQ bull market and pullback?
Listen to this week’s podcast to find out.
[In full disclosure, Tracey owns shares of VBR mentioned on the podcast.]
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>.
Follow us on Twitter: https://twitter.com/zacksresearch
Join us on Facebook: https://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks Investment Research
800-767-3771 ext. 9339
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.