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When is a Stock Truly a Value?

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  • (1:45) - Is It Time To Invest In Apple?
  • (7:30) - How Much Are You Willing To Pay For Earnings?
  • (17:00) - Episode Roundup: AAPL, MU, NVDA, URI, HESS


Welcome to Episode #165 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.

Some popular value stocks now seem pretty pricey. But are they?

Look at Apple (AAPL - Free Report) . It’s now trading at all time highs, up 68% year-to-date, but it is also trading at its most expensive P/E over the last 10 years. It now trades with a forward P/E of 19.9.

Are its earnings and revenues worth paying that price?

The stock was its cheapest in 2013 when its forward P/E was between 8.9 and 12.8. Even when Warren Buffett bought in 2016, the shares were trading at 9.9 to 13.9x.

Are the Cyclicals Finally Cheap?

1.       Micron MU is not “cheap.” It’s trading at 19x. But in 2016, it traded at 105x before earnings started rising dramatically. Have the earnings bottomed again?

2.       NVIDIA NVDA is now trading at 39x but when earnings were soaring in 2017 it traded as high as 59x. Does that make it a bargain?

3.       United Rentals URI is already cheap, trading with a forward P/E of 8. Revenues and earnings are expected to rise by the double digits this year. In 2010, it traded with a forward P/E of 70 as earnings collapsed following the recession.

4.       H&E Equipment HEES is also an equipment rental company which is trading at 14x. It’s expected to see double digit earnings growth this year. But has peak cycle already happened?

What else do value investors need to know about investing in the cyclicals?

Listen to this week’s podcast to find out.

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