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Lessons from Warren Buffett's Investing Mistakes

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  • (0:35) - Berkshire Hathaway Annual Meeting: Buying Up More Apple 
  • (4:00) - Warren Buffett’s Take On Amazon and Google
  • (9:20) - What Are The Cheapest Of The FANG?
  • (12:45) - Tracey’s Top Stock Picks
  • (17:25) - Episode Roundup: AAPL, GOOGL, AMZN, LFC, JEC, SLYV

Welcome to Episode #92 of the Value Investor Podcast

Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio service, shares some of her top value investing tips and stock picks.

The Berkshire Hathaway Annual Meeting was recently held again in Omaha. It was presided over by Warren Buffett with Charlie Munger by his side.

The meeting is now a big annual event for value investors with multiple days of activities. Mr. Buffett is also doing more interviews than ever before. This time he appeared on CNBC, Yahoo Finance, and a host of other platforms.

While Berkshire revealed it had bought an even bigger position in FANG stock, Apple (AAPL - Free Report) , Buffett also lamented the ones that got away: specifically, Amazon (AMZN - Free Report) and Alphabet (GOOGL - Free Report) .

It brought up an interesting question: can value investors buy non-value stocks?

Should Value Investors Buy Growth Stocks?

At the meeting, Buffett basically admitted that he didn’t buy the other FANG names, other than Apple, for Berkshire because they were too expensive.

He didn’t buy into the rosy growth projections but has been proven wrong.

Obviously, Buffett’s mandate to only buy value stocks has worked for him. But it may not work for every value investor. The rest of us don’t have a “value only” mandate.

Should value investors still buy some growth stocks in their portfolio?

Classic Value Stocks are Still Available

If you want to stick with the classic value stock, you’ll have buying opportunities, but not many of them.

Tracey screened for stocks with low P/Es, P/B ratios, P/S ratios and PEGs along with Zacks Ranks of #1 (Strong Buy) and #2 (Buy).

With this narrow screen, just 13 stocks came through.

Here are 2 that look intriguing.

2 Classic Value Stocks

  1. China Life Insurance  has a forward P/E of just 13.1 and a PEG of 0.5. Charlie Munger talked about investing his personal portfolio in Chinese stocks in an interview on CNBC. He thought they were cheap. There’s just 1 estimate on this company, though, so investors need to do their research.
  2. Jacobs Engineering Group (JEC - Free Report)  is merging with CH2M and now has 77,000 employees. In its recent earnings report, it raised full year EPS guidance. It has a forward P/E of just 14.1 and a PEG of 1.

Value investors can also enhance their portfolios by buying value stock ETFs.

But which ones should you be buying?

Find out on this week’s podcast.

More Stock News: This Is Bigger than the iPhone!

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