Welcome to Episode #91 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.
Do you have investing luck?
Value investing and lucky investing are similar in several ways. Value investors buy stocks that are often ignored by Wall Street as do many lucky investors.
What Are the Criteria for Lucky Investing?
1. You must be an investor. This may seem basic, but many people “dream” of investing in the next Amazon or Facebook but never actually buy any stocks or ETFs.
2. Diversify. Very few people get anything right the first time. You know the old saying of throwing all the ideas against the wall and seeing what sticks. The same is true for lucky investing. That means you have to own more than one stock, ETF or mutual fund.
Lucky investing, or value investing, isn’t about finding only that one magical stock. You’re going to have misses.
It’s about staying in the game long enough for something to stick.
Screening for Value and Growth Stocks
With earnings season in full swing, why shouldn’t value investors reach for those companies that have already reported earnings and that have great growth stories?
The screen included companies with earnings growth and the Zacks Rank of #1 (Strong Buy) or #2 (Buy), which should mean rising earnings estimates.
For value, the screen included those with P/Es under 15.
The screen returned 43 stocks.
Top Value Stocks to Buy Now: Caterpillar Inc. (CAT)
Caterpillar Inc. (NYSE:CAT) had been soaring so it was out of value contention. But the recent pullback in the shares, combined with rising earnings estimates, gives it a forward P/E of 13.9.
Earnings are expected to rise 51% in 2018 and another 13% in 2019. After a great earnings report, all of the analyst estimates are on the rise for the full year.
Top Value Stocks to Buy Now: Celanese Corporation (CE)
Celanese Corporation (NYSE:CE) is an industrial chemicals maker.
Even though shares have recently rebounded, it still has a forward P/E of 11.8. Earnings are expected to rise 23% in 2018.
Sales are also expected to be bullish, up 14.4% for the year.
Top Value Stocks to Buy Now: Patrick Industries, Inc. (PATK)
Patrick Industries, Inc. (NASDAQ:PATK) is in the hated RV industry. It makes component products for RVs, which made up 69% of first quarter revenue, as well as marine and industrial markets.
RV revenue was up 53% as wholesale unit shipments were up 13% year-over-year in the first quarter. Shares have sunk over 17% year-to-date on fears that the good times in the RV industry wouldn’t last.
It trades with a forward P/E of just 12.6.
Additionally, there are other value stocks that continue to get cheaper, on a P/E basis.
Micron MU now trades with a forward P/E of just 4.1.
Western Digital WDC is also dirt cheap, with a forward P/E of 5.5.
Estimates continue to track higher for fiscal 2019 for both companies. Should investors be getting in?
Find out the answer to this question and more on this week’s podcast.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don’t buy now, you may kick yourself in 2020.