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Welcome to Episode #384 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.
Recently, on X, a wealth management firm posted that it had gotten a new customer account. The person had a portfolio worth $320,000. But it had 237 positions in it.
The tweet didn’t say if these were individual stocks, mutual funds, ETFs, bond funds or a mix of all of the above.
But 237 positions???
How Many Stocks Should You Own?
Warren Buffett has argued that an investor could be diverse with just 3 stocks in a portfolio. Of course, this is only if you have a strong handle on the companies and know exactly how they are performing, and expected to perform.
But for most of us “regular” investors, and not those who are the greatest of all time, it’s going to take more than just 3 companies. Studies have shown that a portfolio can be diverse with anywhere from 10 to 20 stocks.
So why own 100?
Many Good Companies Featured on the Podcasts and with High Zacks Ranks
Tracey brings you top cheap stocks every week on this podcast. She also has top stock picks on the weekly Market Edge Podcast as well.
There are so many great stock picks, that sometimes we want to own them all. But you shouldn’t. Too many stocks in a portfolio can drag down the performance. It’s also impossible to keep track of 100 or more stocks.
If you want to own a big basket of stocks, you can own a stock market index like the S&P 500 or a sector ETF like the semiconductors.
But if you want to own individual stocks, be sure to buy the best.
Screening for PEG Ratio: Value and Growth
Zacks has a premium screen that looks for both value and growth, which is rare. It uses the PEG ratio, which is price-to-earnings divided by growth, to look for the combination.
A PEG ratio under 1.0 indicates both value and growth. Additionally, the screen looks for top Zacks Rank stocks of #1 (Strong Buy) or #2 (Buy), which should indicate rising earnings estimates.
Takeda Pharmaceutical is a large cap Japanese drug manufacturer. It operates in plasma-derived therapies, gastroenterology, oncology, rare diseases and vaccines.
Shares of Takeda Pharmaceutical are down 8.3% over the last year. Earnings are expected to fall 5.4% this year and rise 5.3% next year. It’s cheap, with a PEG ratio of just 0.3.
Takeda Pharmaceutical is a Zacks Rank #1 (Strong Buy).
Should Takeda Pharmaceutical be on your short list or is it a value trap?
Alaska Air Group operates Alaska Airlines, Hawaiian Airlines and Horizon Airlines with more than 120 destinations. It only acquired Hawaiian Airlines in Sep 2024. Analysts are bullish, however, with earnings expected to rise 30% next year.
Shares of Alaska Air Group are up 20% over the last year but it’s still cheap with a PEG ratio of just 0.5.
Alaska Air Group is a Zacks Rank #1 (Strong Buy).
Now that the Hawaiian merger is complete, should value investors be looking at Alaska Air Group?
RingCentral is a provider of AI-driven cloud business communications contact center, video and hybrid event solutions. It’s in Zacks Software industry and has a market cap of $2.8 billion.
In the second quarter, RingCentral grew subscription revenue 10% year-over-year. Earnings are expected to rise 13% in 2024 and another 14.7% in 2025.
Shares of RingCentral are up 7.7% over the last year and are still cheap with a PEG ratio of just 0.4.
RingCentral is a Zacks Rank #2 (Buy) stock.
Should a software company like RingCentral be on your value short list?
What Else Should You Know About How Many Stocks to Own in a Portfolio?
Tune into this week’s podcast to find out.
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How Many Stocks Should You Own?
Welcome to Episode #384 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.
Recently, on X, a wealth management firm posted that it had gotten a new customer account. The person had a portfolio worth $320,000. But it had 237 positions in it.
The tweet didn’t say if these were individual stocks, mutual funds, ETFs, bond funds or a mix of all of the above.
But 237 positions???
How Many Stocks Should You Own?
Warren Buffett has argued that an investor could be diverse with just 3 stocks in a portfolio. Of course, this is only if you have a strong handle on the companies and know exactly how they are performing, and expected to perform.
But for most of us “regular” investors, and not those who are the greatest of all time, it’s going to take more than just 3 companies. Studies have shown that a portfolio can be diverse with anywhere from 10 to 20 stocks.
So why own 100?
Many Good Companies Featured on the Podcasts and with High Zacks Ranks
Tracey brings you top cheap stocks every week on this podcast. She also has top stock picks on the weekly Market Edge Podcast as well.
There are so many great stock picks, that sometimes we want to own them all. But you shouldn’t. Too many stocks in a portfolio can drag down the performance. It’s also impossible to keep track of 100 or more stocks.
If you want to own a big basket of stocks, you can own a stock market index like the S&P 500 or a sector ETF like the semiconductors.
But if you want to own individual stocks, be sure to buy the best.
Screening for PEG Ratio: Value and Growth
Zacks has a premium screen that looks for both value and growth, which is rare. It uses the PEG ratio, which is price-to-earnings divided by growth, to look for the combination.
A PEG ratio under 1.0 indicates both value and growth. Additionally, the screen looks for top Zacks Rank stocks of #1 (Strong Buy) or #2 (Buy), which should indicate rising earnings estimates.
This screen returned just 22 stocks.
3 Top Stocks with Both Value and Growth
1. Takeda Pharmaceutical Co. Ltd. (TAK - Free Report)
Takeda Pharmaceutical is a large cap Japanese drug manufacturer. It operates in plasma-derived therapies, gastroenterology, oncology, rare diseases and vaccines.
Shares of Takeda Pharmaceutical are down 8.3% over the last year. Earnings are expected to fall 5.4% this year and rise 5.3% next year. It’s cheap, with a PEG ratio of just 0.3.
Takeda Pharmaceutical is a Zacks Rank #1 (Strong Buy).
Should Takeda Pharmaceutical be on your short list or is it a value trap?
2. Alaska Air Group, Inc. (ALK - Free Report)
Alaska Air Group operates Alaska Airlines, Hawaiian Airlines and Horizon Airlines with more than 120 destinations. It only acquired Hawaiian Airlines in Sep 2024. Analysts are bullish, however, with earnings expected to rise 30% next year.
Shares of Alaska Air Group are up 20% over the last year but it’s still cheap with a PEG ratio of just 0.5.
Alaska Air Group is a Zacks Rank #1 (Strong Buy).
Now that the Hawaiian merger is complete, should value investors be looking at Alaska Air Group?
3. RingCentral, Inc. (RNG - Free Report)
RingCentral is a provider of AI-driven cloud business communications contact center, video and hybrid event solutions. It’s in Zacks Software industry and has a market cap of $2.8 billion.
In the second quarter, RingCentral grew subscription revenue 10% year-over-year. Earnings are expected to rise 13% in 2024 and another 14.7% in 2025.
Shares of RingCentral are up 7.7% over the last year and are still cheap with a PEG ratio of just 0.4.
RingCentral is a Zacks Rank #2 (Buy) stock.
Should a software company like RingCentral be on your value short list?
What Else Should You Know About How Many Stocks to Own in a Portfolio?
Tune into this week’s podcast to find out.