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Welcome to Episode #364 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 discuss how to avoid the most common stock investing mistakes. But don’t worry, we all make these mistakes at one time or another. But the key is to develop better habits so you don’t keep repeating them.
First Mistake: Not Starting
Believe it or not, one of the biggest mistakes many people make is to never to start investing. Procrastination takes over and you never open up that IRA or trading account.
Another mistake, which piggybacks on never starting, is starting to invest at an older age. Among the biggest regrets of older investors was not starting earlier.
Just start.
Second Mistake: Jumping on the Latest Trends
Did you buy Cathie Wood’s Ark Innovation ETF in 2020 because it was up over 100% that year? If so, you were jumping into the latest trend. Many times, following the hottest stocks, or trends, can end badly as many investors tend to get into a trend late in its cycle.
Currently, AI is the latest trend. At summer barbecues, investors are asking Tracey about stocks like C3.ai and NVIDIA.
C3.ai has the best ticker, right now, on Wall Street in AI. Shares of C3.ai are up 195% year-to-date as money pours in the AI industry.
C3.ai has no P/E because the company is expected to have negative earnings in 2024 or a loss of $0.28. It’s price-to-sales (P/S) ratio, however, is 14, which is high.
NVIDIA has been the darling of Wall Street in 2023 thanks to its AI business, but how many retail investors have ever heard of them? At barbecues, investors aren’t mentioning NVIDIA to Tracey.
NVIDIA shares are up 182% year-to-date nevertheless. It’s definitely one of the hot stocks in 2023 as professional investors pile in.
NVIDIA trades with a forward P/E of 53 and a P/S ratio of 40. NVIDIA is not cheap, but earnings are soaring.
Is NVIDIA also too hot to handle?
Mistake Three: Not Doing Your Own Research
At a summer barbecue, Tracey was asked about T-Mobile and Visa because a Chicago billionaire owned T-Mobile (allegedly) and Warren Buffett owned Visa (Berkshire bought it in 2011).
Other than billionaires buying the stocks, these investors didn’t know anything else about these companies.
A big mistake is not doing your own research. Stock investors are owners of their companies. Shouldn’t you know what a company makes or does before you become an owner?
T-Mobile performed well during the pandemic, with the shares up 127% over the last 5 years compared to the S&P 500 up 59% during that same time. This year, however, shares are down 2.9%.
T-Mobile has a forward P/E of 19.3 but a PEG ratio of just 0.6. Earnings are expected to jump 239% this year to $6.99 from $2.06.
However, if you’re looking for income, T-Mobile doesn’t pay a dividend.
Visa has been a phenomenal stock since its 2008 IPO. Shares are up 770% during that period versus just 100% for the S&P 500.
Visa got expensive during the pandemic on a P/E basis but shares cooled off in the last 2 years. They’re down 4% during that period while earnings continue to rise. Earnings are expected to be up 14.5% in fiscal 2023 and 12.8% in fiscal 2024.
Visa now has a forward P/E of 26.3. It’s a Zacks Rank #3 (Buy).
Should Visa be back on your short list?
Update on Walgreens Boots Alliance: A Value Trap?
Tracey recently did a podcast on the dividend aristocrats which included Walgreens Boots Alliance (WBA - Free Report) . Shares of Walgreens Boots Alliance were near 5-year lows ahead of its earnings report. And then it reported earnings. It cut guidance and announced it was cutting 150 stores in the United States.
Shares of Walgreens Boots Alliance fell to new 5-year lows and are at 2012 levels. It continues to pay its dividend, however, currently yielding 6.1%.
Another mistake investors make is only buying a stock for its dividend. High dividends, outside of REITs and commodity stocks, can be a warning sign of a value trap.
Is Walgreens Boots Alliance a value trap?
What Else do you Need to Know about Investing Mistakes?
Listen to this week’s podcast to find out.
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How to Avoid the Most Common Investing Mistakes
Welcome to Episode #364 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 discuss how to avoid the most common stock investing mistakes. But don’t worry, we all make these mistakes at one time or another. But the key is to develop better habits so you don’t keep repeating them.
First Mistake: Not Starting
Believe it or not, one of the biggest mistakes many people make is to never to start investing. Procrastination takes over and you never open up that IRA or trading account.
Another mistake, which piggybacks on never starting, is starting to invest at an older age. Among the biggest regrets of older investors was not starting earlier.
Just start.
Second Mistake: Jumping on the Latest Trends
Did you buy Cathie Wood’s Ark Innovation ETF in 2020 because it was up over 100% that year? If so, you were jumping into the latest trend. Many times, following the hottest stocks, or trends, can end badly as many investors tend to get into a trend late in its cycle.
Currently, AI is the latest trend. At summer barbecues, investors are asking Tracey about stocks like C3.ai and NVIDIA.
1. C3.ai, Inc. (AI - Free Report)
C3.ai has the best ticker, right now, on Wall Street in AI. Shares of C3.ai are up 195% year-to-date as money pours in the AI industry.
C3.ai has no P/E because the company is expected to have negative earnings in 2024 or a loss of $0.28. It’s price-to-sales (P/S) ratio, however, is 14, which is high.
Is C3.ai simply too hot to handle?
2. NVIDIA Corp. (NVDA - Free Report)
NVIDIA has been the darling of Wall Street in 2023 thanks to its AI business, but how many retail investors have ever heard of them? At barbecues, investors aren’t mentioning NVIDIA to Tracey.
NVIDIA shares are up 182% year-to-date nevertheless. It’s definitely one of the hot stocks in 2023 as professional investors pile in.
NVIDIA trades with a forward P/E of 53 and a P/S ratio of 40. NVIDIA is not cheap, but earnings are soaring.
Is NVIDIA also too hot to handle?
Mistake Three: Not Doing Your Own Research
At a summer barbecue, Tracey was asked about T-Mobile and Visa because a Chicago billionaire owned T-Mobile (allegedly) and Warren Buffett owned Visa (Berkshire bought it in 2011).
Other than billionaires buying the stocks, these investors didn’t know anything else about these companies.
A big mistake is not doing your own research. Stock investors are owners of their companies. Shouldn’t you know what a company makes or does before you become an owner?
3. T-Mobile (TMUS - Free Report)
T-Mobile performed well during the pandemic, with the shares up 127% over the last 5 years compared to the S&P 500 up 59% during that same time. This year, however, shares are down 2.9%.
T-Mobile has a forward P/E of 19.3 but a PEG ratio of just 0.6. Earnings are expected to jump 239% this year to $6.99 from $2.06.
However, if you’re looking for income, T-Mobile doesn’t pay a dividend.
Should T-Mobile be on your short list?
4. Visa Inc. (V - Free Report)
Visa has been a phenomenal stock since its 2008 IPO. Shares are up 770% during that period versus just 100% for the S&P 500.
Visa got expensive during the pandemic on a P/E basis but shares cooled off in the last 2 years. They’re down 4% during that period while earnings continue to rise. Earnings are expected to be up 14.5% in fiscal 2023 and 12.8% in fiscal 2024.
Visa now has a forward P/E of 26.3. It’s a Zacks Rank #3 (Buy).
Should Visa be back on your short list?
Update on Walgreens Boots Alliance: A Value Trap?
Tracey recently did a podcast on the dividend aristocrats which included Walgreens Boots Alliance (WBA - Free Report) . Shares of Walgreens Boots Alliance were near 5-year lows ahead of its earnings report. And then it reported earnings. It cut guidance and announced it was cutting 150 stores in the United States.
Shares of Walgreens Boots Alliance fell to new 5-year lows and are at 2012 levels. It continues to pay its dividend, however, currently yielding 6.1%.
Another mistake investors make is only buying a stock for its dividend. High dividends, outside of REITs and commodity stocks, can be a warning sign of a value trap.
Is Walgreens Boots Alliance a value trap?
What Else do you Need to Know about Investing Mistakes?
Listen to this week’s podcast to find out.