How To Spot Value Stocks With Real Value

This week, Kate’s guest is Sean O’Hara, President at Pacer Financial, which manages a number of ETFs representing various asset classes, regions and investment themes. Sean talks specifically about the Pacer US Cash Cows 100 ETF (COWZ), which uses free cash flow yield to identify companies with strong potential. This approach has worked out well recently, with the fund returning 43% in 2021, vs. the S&P’s return of 26.44%.

Sean also discusses the characteristics of specific stocks within that portfolio.

Topics discussed include:

-High free cash flow yield- what is it, how is it calculated, and why does Sean like that as a mechanism to evaluate top-performing stocks

How Sean’s company’s ETF, COWZ, identifies companies with high free cash flow yield

What has changed since Fama and French won their Nobel Prize in economics, and why investors should look at different fundamental metrics than they did a few decades ago?

Why so many companies today are valued with intangible, rather than tangible, assets.

What sectors is Sean increasing exposure to, given the current broad market environment, as well as high inflation?

How Sean’s approach resulted in a 43% return last year, with the P/E ratio never going above 13. That means the stocks he’s buying are cheap relative to their peers, on a free cash flow yield basis.

What sectors is Sean’s fund overweight right now?

What traditional dividend-paying sector does Sean’s fund typically avoid?

Which old-line materials and commodities stocks fit the fund’s screening criteria, and have been strong performers lately.

Why the war in Ukraine is boosting performance in one of Sean’s portfolio companies

Why a stock long considered a tech growth stock is now a value play, based on its multiples.

How Sean adds money-making stocks at a discount.

Why McDonald’s a few decades ago is a template for other companies’ slowing growth today.

How an old-school tech company in Sean’s portfolio is reinventing itself in the era of cloud computing.

Stocks mentioned:

Discovery (DISCA)

Meta (FB)

IBM (IBM)

Intel (INTC)

Moderna (MRNA)

Ford (F)

CBS Viacom (Paramount Global) (PARA)

US Steel (X)

Archer Daniels Midland (ADM)

ETF:

Pacer US Cash Cows 100 ETF (COWZ)

Links mentioned in this episode: https://www.marketbeat.com

This podcast is hosted by ZenCast.fm