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What is a Value Stock?

Tracey Ryniec
  • (0:20) - What Are Value Stocks?
  • (3:10) - 3 Top Attributes of a Value Stock
  • (10:25) - Stock Screener and Tracey’s Top Stock Picks
  • (15:20) - Episode Roundup: AMZN, C, CVS, LNC
  •                 Podcast@Zacks.com

Welcome to Episode #140 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.

Before this year’s Berkshire Hathaway annual meeting in Omaha, Warren Buffett announced that one of his lieutenants that invests for the Berkshire portfolio, had bought shares of Amazon AMZN in the first quarter.

We don’t yet know how large the position is. Buffett reassured shareholders that his team is still following the value investing strategy.

But are they?

Benjamin Graham’s Keys to Finding Value Stocks

 Investors should know what makes up an actual “value” stock.

It isn’t simply a cheap growth stock.

There are certain fundamentals that should be there in value stocks including a low P/E, 5-years of earnings growth, and a low Price-to-Book ratio.

Screening for some of Graham’s requirements produced a list of 11 stocks.

3 Value Stocks That Pay Dividends

1.       Citigroup C is cheap with just a forward P/E of 9. It pays a nice dividend yielding 2.6%. It also has earnings growth, with a PEG ratio of 0.7.

2.       CVS CVS shares have sunk as investors have fled the healthcare stocks on worries about Medicare-for-all. CVS now owns Aetna, one of the largest health insurers. It’s also cheap, with a forward P/E of 8.1. It pays a dividend of 2%.

3.       Lincoln National LNC sells life insurance, handles employee benefits, and does wealth management. It has a forward P/E of just 7. Lincoln pays a dividend with a yield of 1.3%.

What else should you know about what makes a value stock?

Listen to this week’s podcast to find out.

Breakout Biotech Stocks with Triple-Digit Profit Potential

The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.

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Citigroup Inc. (C) : Free Stock Analysis Report
 
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
 
Lincoln National Corporation (LNC) : Free Stock Analysis Report
 
Berkshire Hathaway Inc. (BRK.B) : Free Stock Analysis Report
 
CVS Health Corporation (CVS) : Free Stock Analysis Report
 
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