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Welcome to Episode #138 of the Zacks Market Edge Podcast.
Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.
In this episode, Tracey is joined by Kevin Cook, Zacks Senior Strategist and the Editor of the TAZR portfolio and the Health Care Innovators portfolio, to discuss the basic premise of how to pick a stock.
Both Tracey and Kevin run their own Zacks portfolios so they are constantly picking new stocks.
But Zacks has over 4400 stocks in its Zacks Rank universe. How does an investor go about narrowing that down?
Kevin shares his 10-step process for picking stocks. Here are the first 3 steps he deploys.
First 3 Steps in the Stock Picking Process
1. Sector: Decide what sector you’re going to focus on. Do you like the tech stocks? Or what about retail? That will narrow it substantially.
2. Zacks Rank: Use the Zacks Rank to narrow the list down further. If you look only for Zacks Rank #1 (Strong Buy) and #2 (Buy) stocks then they should have rising earnings estimates. Don’t all investors want rising earnings?
3. Growth vs Valuation: Look for growth versus valuation metrics. You can look at P/E and earnings growth or use the PEG ratio to narrow it further.
The other 7 steps are a combination of technicals and fundamentals. Listen to the podcast to find out what the other important steps are.
What Stocks Did the 10-Step Process Yield?
1. Align Technology (ALGN - Free Report) has been a top healthcare stock. The company makes the Invisalign orthodontics treatment which is popular with teens. The stock isn’t cheap any more with a P/E of 76, but earnings are expected to be up another 22% in 2018 and 17% in 2019. Why does Kevin like it so much?
2. Alibaba (BABA - Free Report) is one of the top retail and technology names in China although its Zacks Rank has recently fallen to a Zacks Rank #5 (Strong Sell) as the full year estimates were recently cut. Kevin used to own it in his Zacks portfolio. It fits into one of Kevin’s key indicators for picking stocks for the long term: the franchise. Alibaba is trading at 38x which actually makes it one of the cheaper big cap Chinese stocks.
3. Microsoft (MSFT - Free Report) was also a franchise stock for decades but that seemed to fizzle out at the turn of the century. However, new acquisitions like GitHub and LinkedIn, along with the cloud, have re-energized this old tech titan.
4. Etsy (ETSY - Free Report) went through rocky times as the original CEO left and the company had to do cost-cutting, including layoffs. Tracey likes buying beaten down quality names. This is one turnaround that has worked. Shares are up 112% in 2018. They now trade with a forward P/E of 79 but earnings are expected to rise 42% in 2018. It’s a stock that growth investors should keep on their radar.
5. Amazon (AMZN - Free Report) still continues to push the boundaries. It’s Prime Day promotion was so popular this year that its site actually crashed. It’s been a long time since that has happened. And it continues to push into new markets, including healthcare. Love it or hate it because of its high P/E, it is expected to grow earnings by an impressive 178% this year.
Be careful about being a perfectionist in your stock picking.
Kevin doesn’t expect his stocks to satisfy all of his 10-step process. Be nimble.
What else should you know about stock picking?
Tune into this week’s podcast to find out what all the 10 steps are and how they can help you be a better stock picker.
[In full disclosure, Tracey owns shares of MSFT and AMZN 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.
Image: Bigstock
A How-To Plan for Picking Stocks
Welcome to Episode #138 of the Zacks Market Edge Podcast.
Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.
In this episode, Tracey is joined by Kevin Cook, Zacks Senior Strategist and the Editor of the TAZR portfolio and the Health Care Innovators portfolio, to discuss the basic premise of how to pick a stock.
Both Tracey and Kevin run their own Zacks portfolios so they are constantly picking new stocks.
But Zacks has over 4400 stocks in its Zacks Rank universe. How does an investor go about narrowing that down?
Kevin shares his 10-step process for picking stocks. Here are the first 3 steps he deploys.
First 3 Steps in the Stock Picking Process
1. Sector: Decide what sector you’re going to focus on. Do you like the tech stocks? Or what about retail? That will narrow it substantially.
2. Zacks Rank: Use the Zacks Rank to narrow the list down further. If you look only for Zacks Rank #1 (Strong Buy) and #2 (Buy) stocks then they should have rising earnings estimates. Don’t all investors want rising earnings?
3. Growth vs Valuation: Look for growth versus valuation metrics. You can look at P/E and earnings growth or use the PEG ratio to narrow it further.
The other 7 steps are a combination of technicals and fundamentals. Listen to the podcast to find out what the other important steps are.
What Stocks Did the 10-Step Process Yield?
1. Align Technology (ALGN - Free Report) has been a top healthcare stock. The company makes the Invisalign orthodontics treatment which is popular with teens. The stock isn’t cheap any more with a P/E of 76, but earnings are expected to be up another 22% in 2018 and 17% in 2019. Why does Kevin like it so much?
2. Alibaba (BABA - Free Report) is one of the top retail and technology names in China although its Zacks Rank has recently fallen to a Zacks Rank #5 (Strong Sell) as the full year estimates were recently cut. Kevin used to own it in his Zacks portfolio. It fits into one of Kevin’s key indicators for picking stocks for the long term: the franchise. Alibaba is trading at 38x which actually makes it one of the cheaper big cap Chinese stocks.
3. Microsoft (MSFT - Free Report) was also a franchise stock for decades but that seemed to fizzle out at the turn of the century. However, new acquisitions like GitHub and LinkedIn, along with the cloud, have re-energized this old tech titan.
4. Etsy (ETSY - Free Report) went through rocky times as the original CEO left and the company had to do cost-cutting, including layoffs. Tracey likes buying beaten down quality names. This is one turnaround that has worked. Shares are up 112% in 2018. They now trade with a forward P/E of 79 but earnings are expected to rise 42% in 2018. It’s a stock that growth investors should keep on their radar.
5. Amazon (AMZN - Free Report) still continues to push the boundaries. It’s Prime Day promotion was so popular this year that its site actually crashed. It’s been a long time since that has happened. And it continues to push into new markets, including healthcare. Love it or hate it because of its high P/E, it is expected to grow earnings by an impressive 178% this year.
Be careful about being a perfectionist in your stock picking.
Kevin doesn’t expect his stocks to satisfy all of his 10-step process. Be nimble.
What else should you know about stock picking?
Tune into this week’s podcast to find out what all the 10 steps are and how they can help you be a better stock picker.
[In full disclosure, Tracey owns shares of MSFT and AMZN 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 >>