- (0:45) - Still Learning From Benjamin Graham: The Intelligent Investor
- (7:45) - Navigating The Stock Market Rebound: Margin Of Safety
- (23:40) - Stock Screener And Tracey’s Top Stock Picks
- (33:00) - Episode Roundup: ABBV, BGS, HRB, MSFT, AAPL
Welcome to Episode #191 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.
At the 2020 Berkshire Hathaway annual meeting in May 2020, Warren Buffett again discussed his investing mentor, Benjamin Graham, describing him as one of the smartest people he’s ever met.
He also said that Graham’s Book, The Intelligent Investor, changed his life.
First published in 1949, The Intelligent Investor was the first investing book to be written for Mom and Pop investors.
Tracey has covered several different chapters of the 600 page book on previous podcasts.
But this week, given the volatility in the stock markets thanks to the coronavirus crisis, she tackled the final chapter, Chapter 20, appropriately titled: “Margin of Safety as the Central Concept of Investment”.
How Can You Find Margin of Safety Stocks?
Graham discusses investing in companies that have paid dividends over a number of years and in abnormal market conditions, such as a recession.
As we have seen this year, many companies have suspended their dividend due to the uncertainty around COVID-19.
But what about those companies that are still paying it?
And what if they also were Zacks Ranks of #1 (Strong Buy) and #2 (Buy), which hopefully means rising earnings estimates?
5 Margin of Safety Stocks
1. AbbVie (ABBV - Free Report) just closed on its big acquisition of Botox maker Allergan. This Zacks Rank #1 (Strong Buy) drug maker is paying a dividend yielding 5.2%. It’s also dirt cheap, with a forward P/E of just 8.5.
2. B&G Foods (BGS - Free Report) is having its day in the sun as Americans are buying packaged foods in droves thanks to the coronavirus shutdowns. It has 50 brands in its arsenal including Green Giant, Spice Islands and Cream of Wheat. It recently announced its dividend, the 63rd consecutive payment to shareholders. It’s currently yielding 8.2%.
3. H&R Block, Inc. (HRB - Free Report) is apparently still paying the dividend which is yielding 6.3%. This Zacks Rank #2 (Buy) is the cheapest stock here, with a forward P/E of just 5.3.
4. Microsoft (MSFT - Free Report) has been paying a dividend for over a decade and with its cash hoard, is unlikely to suspend it during the crisis. But shareholders are only getting a yield of 1.1% and investors will have to pay 32x forward earnings to own it.
5. Apple (AAPL - Free Report) also has a big cash hoard, so it too should easily be able to pay its dividend during 2020. But it’s yielding even less, at just 1%, as the tech giant’s forward P/E has risen to its highest in over a decade, at 25.
What else should you know about Benjamin Graham and the book that changed Warren Buffett’s life?
Tune into this week’s podcast to find out.
[In full disclosure, Tracey owns shares of MSFT in her personal portfolio.]
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>