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Welcome to Episode #288 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.
This week, Tracey looks at some popular growth stocks which used to be expensive but because of the big growth sell-off, may now be value stocks.
FTSE Russell Reconfigures its Key Indexes
FTSE Russell operates key indexes such as the Russell 3000 Index and the Russell 1000 Value Index, which are used as benchmarks by many professional managers.
In late June of every year, it reconfigures the indexes and that means the weighting of some stocks, and industries, will change.
In 2022, some technology and communication stocks, which saw their stocks sink and valuations get cheaper, saw their weightings rise in the Russell 1000 Value Index and decline in the Growth Index.
Meta Platforms Is a Value Stock
Meta Platforms (META - Free Report) was one of the stocks that saw its weight rise in the Russell 1000 Value Index and decline in the growth index after shares fell 52% in the last year.
Meta Platforms now fits in better in the value stock index than it does in growth.
It has a forward P/E of just 14.7 and a PEG ratio of 1.3. It has classic value fundamentals. It’s actually cheap.
Who could have foreseen Meta Platforms being a value stock just 10 years after its splashy IPO?
From Growth to Value in 2022
Several other popular growth stocks also have fallen into the value category this year thanks to huge sell-offs.
Netflix used to be the most expensive of the FAANG stocks with a P/E well over 50. It was also one of the best performing stocks from 2010 to 2020.
But after shares sunk 65% in the last year as investors soared on the streaming companies, Netflix now trades with a forward P/E of just 17.3. Netflix also has a low PEG ratio of just 1.2.
PayPal was a Wall Street darling for the years prior to the pandemic and was also a pandemic winner as fintech was a big winner when online payments dominated.
But over the last year, PayPal shares have sunk 74% and that has pushed its forward P/E down to 18.9.
It has a low PEG ratio of just 1.1, which almost puts it into classic value territory which is under 1.0.
Pinterest was a pandemic winner when the world was locked inside during the first wave of COVID restrictions. But on the reopening, Pinterest saw a decline in monthly active users in its key United States market.
Pinterest shares have fallen 75% in the last year and have nearly roundtripped back to the start of the pandemic.
It now trades with a forward P/E of 24 and has a PEG ratio of 1.6.
Is it cheap enough for value investors to put it on their wish list?
4. Zoom Video Communications, Inc. (ZM - Free Report)
Who didn’t Zoom when the coronavirus pandemic hit in 2020? Zoom Video was a big pandemic winner as earnings soared.
But on the reopen, as people started returning to offices and seeing people in person, business cooled.
Zoom shares fell 69% over the last year. It’s forward P/E came down but is still at 32x.
Has Zoom bottomed or will value investors get it much cheaper later?
What Else do you Need to Know About the “new” Value Stocks?
Tune into this week’s podcast to find out.
[In full disclosure, Tracey owns META in her personal portfolio.]
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Meta Platforms is a Value Stock
Welcome to Episode #288 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.
This week, Tracey looks at some popular growth stocks which used to be expensive but because of the big growth sell-off, may now be value stocks.
FTSE Russell Reconfigures its Key Indexes
FTSE Russell operates key indexes such as the Russell 3000 Index and the Russell 1000 Value Index, which are used as benchmarks by many professional managers.
In late June of every year, it reconfigures the indexes and that means the weighting of some stocks, and industries, will change.
In 2022, some technology and communication stocks, which saw their stocks sink and valuations get cheaper, saw their weightings rise in the Russell 1000 Value Index and decline in the Growth Index.
Meta Platforms Is a Value Stock
Meta Platforms (META - Free Report) was one of the stocks that saw its weight rise in the Russell 1000 Value Index and decline in the growth index after shares fell 52% in the last year.
Meta Platforms now fits in better in the value stock index than it does in growth.
It has a forward P/E of just 14.7 and a PEG ratio of 1.3. It has classic value fundamentals. It’s actually cheap.
Who could have foreseen Meta Platforms being a value stock just 10 years after its splashy IPO?
From Growth to Value in 2022
Several other popular growth stocks also have fallen into the value category this year thanks to huge sell-offs.
1. Netflix (NFLX - Free Report)
Netflix used to be the most expensive of the FAANG stocks with a P/E well over 50. It was also one of the best performing stocks from 2010 to 2020.
But after shares sunk 65% in the last year as investors soared on the streaming companies, Netflix now trades with a forward P/E of just 17.3. Netflix also has a low PEG ratio of just 1.2.
Is this a buying opportunity in Netflix?
2. PayPal Holdings, Inc. (PYPL - Free Report)
PayPal was a Wall Street darling for the years prior to the pandemic and was also a pandemic winner as fintech was a big winner when online payments dominated.
But over the last year, PayPal shares have sunk 74% and that has pushed its forward P/E down to 18.9.
It has a low PEG ratio of just 1.1, which almost puts it into classic value territory which is under 1.0.
Is it time to take another look at PayPal?
3. Pinterest, Inc. (PINS - Free Report)
Pinterest was a pandemic winner when the world was locked inside during the first wave of COVID restrictions. But on the reopening, Pinterest saw a decline in monthly active users in its key United States market.
Pinterest shares have fallen 75% in the last year and have nearly roundtripped back to the start of the pandemic.
It now trades with a forward P/E of 24 and has a PEG ratio of 1.6.
Is it cheap enough for value investors to put it on their wish list?
4. Zoom Video Communications, Inc. (ZM - Free Report)
Who didn’t Zoom when the coronavirus pandemic hit in 2020? Zoom Video was a big pandemic winner as earnings soared.
But on the reopen, as people started returning to offices and seeing people in person, business cooled.
Zoom shares fell 69% over the last year. It’s forward P/E came down but is still at 32x.
Has Zoom bottomed or will value investors get it much cheaper later?
What Else do you Need to Know About the “new” Value Stocks?
Tune into this week’s podcast to find out.
[In full disclosure, Tracey owns META in her personal portfolio.]