- (0:45) - Buying Apple and Amazon in 2009
- (4:15) - Finding Value In Old Economy Stocks
- (6:30) - Tracey’s Top Stock Picks
- (13:00) - Episode Roundup: AAPL, HEES, CKHUY, MIC, SJM, NCLH, CMCSA, CR
Welcome to Episode #138 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.
The technology stocks are hitting new highs again but, strangely enough, so are some of the “old economy” stocks, such as those in manufacturing, chemicals and the railroads.
That’s a good sign for this rally but investors who are over weighted in technology should really think about diversifying their portfolio.
For example, Apple AAPL has been a great performer over the last 10 years even as it has been among the cheaper of the big technology companies. Shares are up over 1200% since 2009.
Apple used to trade around 10x and is now trading with a forward P/E of 18.3. It’s simply not that cheap of a stock anymore.
But what about the old economy stocks?
Are any of them still values?
Screening for Cheap Old Economy Stocks
There’s no easy way to screen for “old economy” stocks as that really isn’t a segment of the stock market, per say. There’s no good definition about what that means.
But you can run a screen which includes the Zacks Rank of #1 (Strong Buy) and #2 (Buy), in order to get stocks with rising earnings estimates, and then use a value fundamental like a P/E under 15.
In order to get the “old economy” part though, you will have to screen using different sectors or industries.
For this screen, different sectors were added to find cheap stocks. They may not all have been “old economy” though and a couple of Tracey’s favorites didn’t make the screen.
For instance, Crane CR is cheap enough, with a forward P/E of just 13.9, but it’s a Zacks Rank #4 (Sell) right now as it hasn’t reported earnings yet. With that Zacks Rank, it couldn’t make the screen.
Still, the number of stocks that came through this screen when it was run for various sectors, was small.
Here are three that made the cut.
3 Value Stocks for Your Investing Short List
1. H&E Equipment Services HEES has a forward P/E of just 12.8. The equipment rental company has a market cap of just $1 billion but it pays a dividend currently yielding 3.8%. Shares are up 46% year-to-date already. It’s about to report earnings, so tune in.
2. Macquarie Infrastructure Co MIC is cheap, with a forward P/E of just 8.5. But you’re really buying in for the juicy dividend, which currently yields 9.7%. Macquarie reports earnings on May 1.
3. Norwegian Cruise Line Holdings NCLH has rallied 34% to start the year. Yet it still has a forward P/E of 10.6, which is well below the average of the S&P 500 which is 17x. It hasn’t yet reported earnings either so investors should tune in.
Remember, the Zacks Rank will be volatile during earnings season as the analysts adjust their earnings estimates.
These screens should be run multiple times during earnings season as the Rank will be changing.
But the screens didn’t really reveal any of the hot old economy stocks that everyone is talking about, like the railroads.
Are the old economy stocks just not cheap enough right now?
Like technology, are they overbought too?
Tune in to find out.
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Apple Inc. (AAPL) : Free Stock Analysis Report
Crane Company (CR) : Free Stock Analysis Report
Macquarie Infrastructure Company (MIC) : Free Stock Analysis Report
Norwegian Cruise Line Holdings Ltd. (NCLH) : Free Stock Analysis Report
H&E Equipment Services, Inc. (HEES) : Free Stock Analysis Report
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