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How to Start Value Investing in 2021

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  • (0:45) - Becoming A Value Investor In 2021
  • (4:40) - Breaking Down The Royce Value Trust
  • (8:50) - Tracey’s Top Stock Picks
  • (21:00) - Episode Roundup: RVT, IWM, VBR, RZV, SWVI, MIK, BZH, GM, AAWW


Welcome to Episode #217 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.

What if you’re new to value investing?

Maybe you heard an interview with Warren Buffett and have decided you want to try his strategy or perhaps you are the type of investor who likes finding hidden gems?

Where do you start in 2021?

Strategy #1: Read The Intelligent Investor

All value investors should really read the top book on value investing: Benjamin Graham’s “The Intelligent Investor.”

It’s over 600 pages so it’s a lot to take in.

If you don’t want to read it all, consult Tracey’s prior podcasts talking about the lessons from some of the key chapters.

Strategy #2: Hire a Mutual Fund Manager

If you don’t want to pick individual stocks yourself, you can hire Chuck Royce, manager of Royce Value Trust (RVT - Free Report) for the last 34 years.

This mutual fund specializes in small cap value and has 483 holdings.

It’s beating the Russell 2000 benchmark year-to-date with a return of 21.17% through Dec 15 versus the Russell 2000 up 18.97%.

But be aware of management fees which run 0.63%.

Strategy #3: Buy a Small Cap Value ETF

New value investors can also buy a basket of value stocks by buying into one of the value ETFs.

There are several small cap value ETFs out there including Vanguard’s low-cost Small Cap Value ETF (VBR - Free Report) . It has management fees of just 0.07%.

But it owns 912 stocks and Financials is its largest sector at 21%.

Invesco operates the S&P Small Cap 600 Pure Value ETF (RZV - Free Report) which has just 141 holdings.

It’s largest sector is Consumer Discretionary, at 29.2% of the portfolio.

This ETF has been underperforming the S&P 600 index year-to-date.

Strategy #4: Buying Individual Value Stocks

Of course, you can always create your own value stock portfolio, but where do investors get their value stock ideas?

1.       Listen to the Value Investor Podcast each week. Tracey runs screens that aim to uncover hidden gems and cheap stocks with high Zacks Ranks. It’s free. Get it on Spotify or Apple Podcast.

2.       Run your own screens on’s Stock Screener or use predefined value screens, which are great at uncovering deep value and easy to use. To do this, you must be a Zacks Premium member. You can do a free trial here.

3.       Sort the Zacks #1 Rank List via P/E to find the cheapest strong buy stocks. To access the #1 Rank List, you also need to be a Zacks Premium member. Take the free trial.

What are the Cheapest Zacks #1 Rank (Strong Buy) Stocks?

Tracey sorted the Zacks #1 Rank list, including sorting by Zacks Value Style Scores of A, and the cheapest P/Es.

The cheapest stocks included some community and regional banks as well as Chinese stocks, but also included some names that are familiar to most investors.

1.       The Michaels Companies , the arts and craft retailer, is a Zacks Rank #1 (Strong Buy) with a forward P/E of just 5.5.

2.       General Motors (GM - Free Report) also has the Zacks Rank of #1 again and remains cheap, with a forward P/E of 8.97.

What other companies made it on this list? 

Listen to this week’s podcast to find out.

[In full disclosure, Tracey owns shares of VBR in her personal portfolio.]

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