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Welcome to Episode #151 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.
It’s tough being a value investor in 2019.
Bloomberg recently had an article called “Value stocks haven’t traded this low since the dot-com bubble” which laid out all the horrors, including that value stocks, compared to the growth stocks in the developed markets, are now at 19-year lows.
Additionally, Bank of America recently surveyed a bunch of money managers and just 2% believed value stocks would out perform in the next 12 months. It’s the lowest reading for value since 2010.
JPMorgan strategists recently said that they believe these conditions are a “once-in-a-decade” opportunity.
What’s a Value Investor to Do?
Should they throw in the towel like Berkshire Hathaway?
Sure, Buffett owns Apple (AAPL - Free Report) , which he bought as a true value stock back in 2016.
But his lieutenants recently bought Amazon (AMZN - Free Report) , which could be interpreted as a sure sign that value investors must buy some growth names in order to keep up.
Top Tips for Value Investors
1. Have patience. The trade probably isn’t going to show fruition for months or longer. Look at Aflac (AFL - Free Report) . Those shares went nowhere in 2015 and part of 2016 but they were cheap. Finally, they broke out and, over the past 3 years, have made new highs.
2. Buy dirt cheap stocks, not just cheap stocks. Buying at 11x earnings, while cheap, might not cut it anymore. It has to be oversold now. Look for a stock where you just shake your head and say, “that’s absurd.” They ARE out there. In 2018, Synchrony Financial (SYF - Free Report) traded with a forward P/E in the 7s and a dividend yield over 3%. It was dirt cheap. It has since rebounded 55% in 2019.
3. Buy the hated sectors. It’s hard, for sure. But look at energy. Some of the E&Ps, like Cimarex Energy have low P/Es and pay dividends. Cimarex has a dividend yield of 1.6%. Year-to-date, shares are down another 18%. You have to have a really strong stomach and then follow tip #1.
Is it the buying opportunity of the decade?
Tune into this week’s podcast to find out.
[In full disclosure, Tracey currently owns shares of AMZN in her personal portfolio.]
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Image: Bigstock
Value Stocks: A "Once-in-a-Decade" Buying Opportunity?
Welcome to Episode #151 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.
It’s tough being a value investor in 2019.
Bloomberg recently had an article called “Value stocks haven’t traded this low since the dot-com bubble” which laid out all the horrors, including that value stocks, compared to the growth stocks in the developed markets, are now at 19-year lows.
Additionally, Bank of America recently surveyed a bunch of money managers and just 2% believed value stocks would out perform in the next 12 months. It’s the lowest reading for value since 2010.
JPMorgan strategists recently said that they believe these conditions are a “once-in-a-decade” opportunity.
What’s a Value Investor to Do?
Should they throw in the towel like Berkshire Hathaway?
Sure, Buffett owns Apple (AAPL - Free Report) , which he bought as a true value stock back in 2016.
But his lieutenants recently bought Amazon (AMZN - Free Report) , which could be interpreted as a sure sign that value investors must buy some growth names in order to keep up.
Top Tips for Value Investors
1. Have patience. The trade probably isn’t going to show fruition for months or longer. Look at Aflac (AFL - Free Report) . Those shares went nowhere in 2015 and part of 2016 but they were cheap. Finally, they broke out and, over the past 3 years, have made new highs.
2. Buy dirt cheap stocks, not just cheap stocks. Buying at 11x earnings, while cheap, might not cut it anymore. It has to be oversold now. Look for a stock where you just shake your head and say, “that’s absurd.” They ARE out there. In 2018, Synchrony Financial (SYF - Free Report) traded with a forward P/E in the 7s and a dividend yield over 3%. It was dirt cheap. It has since rebounded 55% in 2019.
3. Buy the hated sectors. It’s hard, for sure. But look at energy. Some of the E&Ps, like Cimarex Energy have low P/Es and pay dividends. Cimarex has a dividend yield of 1.6%. Year-to-date, shares are down another 18%. You have to have a really strong stomach and then follow tip #1.
Is it the buying opportunity of the decade?
Tune into this week’s podcast to find out.
[In full disclosure, Tracey currently owns shares of AMZN in her personal portfolio.]
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>