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5 Years Later: Lessons from Buy and Hold Investing

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  • (1:00) - How Successful Would You Be If You Bought These Stocks In 2018?
  • (10:35) - 5 Year Performance of 5 Strong Value Stocks
  • (29:00) - Episode Roundup: PGR, R, EWBC, INTC, HPE


Welcome to Episode #358 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 she was looking at the older episodes of the Value Investor podcast on Zacks podcast YouTube channel and stumbled across the July 18, 2018 episode titled, “5 Value Stocks to Buy and Hold for 5 Years.”

You can listen to it on YouTube here.

5 years later, what happened to the trades talked about in that episode?

Did the buy and hold strategy outperform the S&P 500 over that same time period?

Screening for a Buy and Hold Strategy

Tracey screened for value stocks with growth and dividends. Why dividends? Because they can indicate good free cash flow and a commitment to shareholders by management. If you’re going to hold a stock for 5 years, you want to make sure it has a solid balance sheet.

For value, the screen used a P/E under 15. For dividends, the company had to have a yield of at least 1%.

Tracey pulled out 5 companies she thought investors could realistically hold for a long period. There were no small caps.

5 Years Later: Were These Successful Investments?

1.       The Progressive Corp. (PGR - Free Report)

Progressive is a large property and casualty insurer which was founded in 1937. It’s no longer a value stock, with a forward P/E of 21. Progressive still pays a dividend, but it’s now only yielding 0.5%.

Shares of Progressive have been hitting new all-time highs in 2024.

If you had bought Progressive on July 18, 2018, would you be beating the returns of the S&P 500 over the same period?

2.       Ryder System, Inc. (R - Free Report)

Ryder System is a freight and logistics company. In 2018, Ryder was cheap with a forward P/E of 13. It remains cheap in 2024 even though shares have rallied off the pandemic lows. Ryder trades with a forward P/E of just 10.3 in 2024.

Ryder also continues to pay an attractive dividend. It yielded 2.8% in 2018 and is still paying a yield of 2.4% in 2024.

With the freight market in a recession in 2023, were Ryder shares able to outperform?

3.       East West Bancorp (EWBC - Free Report)

East West Bancorp was chartered in 1973 as a bank for Chinese American immigrants. Headquartered in Pasadena, California, it has 120 locations in both the United States and China, including in Shanghai, Shenzhen and Beijing.

In 2018, East West Bancorp was paying a dividend of just 1.2%. That has changed dramatically in 2024 as East West Bancorp is now yielding 3.2%.

With all the problems in the banking industry, including 2023’s banking crisis, is it impossible to own a bank like East West Bancorp for the long-term?

4.       Intel Corp. (INTC - Free Report)

Intel was the big tech play on the podcast in 2018. The stock had been cheap for years. In 2018, Intel also paid an attractive dividend, yielding 2.3%.

Shares of Intel have been on a tear over the last year, gaining 75.7% in that time. But Intel is no longer cheap. It trades with a forward P/E of 31 and has a PEG ratio of just 2.1.

Intel shares have been volatile in recent years. Was it a good buy and hold stock if you had bought on July 18, 2018?

5.       Hewlett Packard Enterprise Co. (HPE - Free Report)

Hewlett Packard Enterprise is also in technology, in cloud and networking. It’s a slow growth company where sales are expected to rise just 1.7% in fiscal 2024 and 3.1% in fiscal 2025.

In 2018, Hewlett Packard Enterprise was cheap with a forward P/E of 10.8. In 2024, it’s even cheaper with a forward P/E of just 7.9.

Hewlett Packard continues to pay an attractive dividend. It yielded 3% in 2018 and is now yielding 3.4%.

Was Hewlett Packard a successful buy and hold investment if you had bought on July 18, 2018?

What Else Do You Need to Know About Buy and Hold?       

Tune into this week’s podcast to find out how this buy and hold strategy turned out.

[In full disclosure, Tracey owns shares of Ryder in the Zacks Value Investor portfolio.]

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