For Immediate Release
Chicago, IL –June 22, 2018 – Zacks Value Trader is a podcast hosted weekly by Zacks Stock Strategist Tracey Ryniec. Every week, Tracey will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life. To listen to the podcast, click here:
How Long Should You Own a Stock?
Welcome to Episode #97 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.
Two stocks were recently in the news: General Electric GE and Starbucks SBUX.
General Electric is going to be removed from the Dow Jones Industrial Average after 122 years. It’s the oldest member of the index.
Starbucks warned on its guidance for the second quarter and questions were raised about where future growth may come from.
Both are the type of stocks that investors like to hold for long periods, meaning 5 to 20 years.
But should you own them for that long? And when do you know to sell?
Value Investing and Buy and Hold
Value investing and long term buy and hold investing can often go hand-in-hand because value investors like to buy stocks that are being rejected by the rest of Wall Street, and then they hold until there is a turnaround.
Value investors usually have the patience to stay in a stock for years.
Warren Buffett, the most famous value investor in the world, also buys and holds, often for decades.
But even Buffett would agree that not all stocks are meant to be held for a long time period. For example, Buffett just sold out of his recent IBM position even though he had only owned it a few years.
How long should investors hold a stock?
There are 4 criteria investors might want to consider.
Criteria for Long Term Buy and Hold Investors
1. Have the company fundamentals changed? Is it still in the same business as when you originally bought the stock?
2. Do you trust current management? If you own a stock for decades, management should change.
3. Are the hardships easy to turn around? Some companies seem to be on a permanent turnaround.
4. Think about how the company fits into your long-term investing plan. Does it still have a place?
Former Long Term Holds: Are They Buys Now?
These 3 companies have been in many investor portfolios over the years. Some investors have likely owned them for decades.
But should they be going forward?
1. Pfizer PFE was one of the most popular stocks of the 1990s. From Jan 1, 1990 until Jan 1, 2000, the stock rose over 1000%. The other big cap drug stocks weren’t too shabby either. But over the last 18 years, it’s been a different story. Still, the shares look cheap now. Pfizer has a forward P/E of just 12. Should you look at Pfizer if you’re a long-term investor?
2. ExxonMobil XOM will now be the oldest component in the Dow once GE is removed. It looks pretty cheap, with a forward P/E of 16.9 and earnings growth expected of 33%. How did you do if you held it the last 18 years though?
3. Tootsie Roll is known as a “secret company” as it won’t talk with analysts and holds no investor conference calls. Yet the stock was one of the best performers in the last bull rally of 1982 to 2000. One family owns 51% of the shares, however, and the succession plan is unknown. A long-term hold in the 80s and 90s worked with Tootsie Roll, but what about now?
Find out all of Tracey’s long-term investor tips on this week’s podcast.
[In full disclosure, Tracey owns shares of SBUX in her personal portfolio.]
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>
Zacks Investment Research
800-767-3771 ext. 9339
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Pfizer Inc. (PFE) : Free Stock Analysis Report
General Electric Company (GE) : Free Stock Analysis Report
Exxon Mobil Corporation (XOM) : Free Stock Analysis Report
Starbucks Corporation (SBUX) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research