- (0:30) - Stocks Continue To Decline
- (4:40) - Screening For Companies With Good Management: Top Stock Picks
- (16:20) - Episode Roundup: AMAT, GRMN, INMD, MSFT, SYNA, UNP, KSU, NTR, MOS
Welcome to Episode #182 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.
And with the stock market bears roaring, there’s a lot of value stock opportunities out there.
But there’s also a danger that some stocks might have financial stress as the global economy goes into shutdown.
That’s why value investors should look for companies with strong management.
Screening for Management Excellence
It’s hard to screen for management but investors can look for a low debt to equity ratio.
A debt/equity ratio under 1.0 usually means a company has lower risk.
But, be warned, many technology and services companies have low debt/equity ratios as they don’t have the overhead of big manufacturing facilities etc.
Using this screen, it returned 23 companies.
5 Stocks with Management Excellence
1. Applied Materials (AMAT - Free Report) has a debt/equity ratio of just 0.5. Shares are down about 40% year-to-date. It’s cheap, with a forward P/E of 10.8 but does it still have further to fall?
2. Garmin (GRMN - Free Report) said in early February that it was going to recommend a dividend in June. Given what has happened to the global economy since, will that be postponed? Shares are down 30% year-to-date. It’s now trading with a debt/equity ratio of just 0.01.
3. InMode (INMD - Free Report) went IPO last year and now shares have returned to the IPO price. It has a debt/equity ratio of 0. This small cap medical products company has a forward P/E of just 8.
4. Microsoft (MSFT - Free Report) has a debt/equity ratio of just 0.6. It also has billions on its balance sheet and a diverse business model. Shares are only down 11% year-to-date. It still trades with a forward P/E of 26. Is this even much of a deal?
5. Synaptics (SYNA - Free Report) has a debt/equity ratio of 0.69. This human interface solutions company, which makes touch and display products, is down 26% year-to-date. With a P/E of 10, is it a deal?
There are plenty of other companies that value investors might want to consider right now as well.
Find out more about companies with management excellence, and other value stocks, on this week’s podcast.
[In full disclosure, Tracey owns shares of MSFT in her personal portfolio.]
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