Our Model Investment Portfolio to Benefit From the Shift to Value Stocks

New market setting

For value focused investors last week brought a material shift to the overall market environment. Joe Biden’s election as the successor to Donald Trump has been well received by the markets. With the prospects for a near term vaccine seemingly materializing, markets reacted swiftly with a strong move away from “Work From Home” tech stocks to plain vanilla, real estate and value stocks. As People may go back to the office and to shopping malls after all.
The materially different backdrop will require certain portfolio adjustments. Our portfolio management tools have been specifically designed to assist with strategic portfolio management measures.

Portfolio adjustments

Many investors will look to re-position their portfolio to align with the new market environment. It’s not an easy task. To help Ziggma users, we have created a new model investment portfolio called “Top Value Plays – Nov’ 20”. Its main purpose is to provide you with investment ideas in this new market environment.

What has not changed, though, is that stocks remain the best investment option out there with interest rates firmly anchored at zero for the foreseeable future.

Stock screener settings to identify the best value stocks

The following image illustrates the settings we applied in Ziggma’s free stock screener to identify the best opportunities in a shift to value stocks. While it is quite self-explanatory, we want to emphasize the most important aspects you need to pay attention to.

  • Set the Ziggma valuation sub score slider at 75 or above to find stocks with attractive valuations.
  • Look for growth. Many investors that follow a value-based investment approach forget that growth is the prerequisite for long term appreciation in a company’s value. Hence, we set the sliding scales in the growth category as follows: eps growth > 9%; revenue growth > 7%; 5-year constant average eps growth > 8%.
  • Look for profitable companies. If a company is not profitable, you have the reason for why it’s cheap right there. Thus, we set the sliding scale for return on equity at > 15% for both the past year and the average over the past five years.
  • Similarly, a weak balance sheet often makes a company’s stock cheap. This is because the market questions the company’s long term viability. Therefore we configure our fundamental stock screener so as to return only companies with a Ziggma Financial Position sub score greater than 70.

Free stock screener

You can learn more about the Ziggma Scores in this blog article.

The Top Value Stocks Portfolio – as of mid-November 2020

The table below shows the portfolio holdings of the current “Top Value Stocks – Nov 20” portfolio. The “Fundamental” portfolio view is highly instructive and we recommend to pay close attention to it. It provides key performance indicators on growth, profitability and valuation on all portfolio companies in a convenient single view. In addition, it shows these KPIs on an aggregated basis at the portfolio level.

The key parameters for the Top Value Stocks Portfolio – Nov 20 are as follows:

  • Average PE ratio: 23.7x
  • ROE: 38.3%
  • Rev Growth: 15%
  • EPS Growth 65%

Model Investment Portfolio

The portfolio is well diversified with a slight bias towards the Technology and Healthcare sectors. This is unsurprising as these are the sectors with the highest growth rates, as you can see in the Sector Performance table on our Market Overview page.Model Investment Portfolio

For the Ziggma investors that do not yet use Ziggma alerts, please note that Ziggma lets you set custom alerts on everything from sector exposure, price, key ratios and technical indicators.You can see an example on this in the lower part of the preceding chart. The custom alert there lets you set the maximum exposure limit to a single sector. As soon as a limit set by you is reached you will receive a notification of the event. By using smart alerts, you will let Ziggma do the monitoring for you freeing up time to do more research, for instance.

Providing investment ideas through Model Portfolios

We hope that you will find inspiration for your own stock picks with our model investment portfolios. Please check out the wide range of model portfolios available to you at Ziggma for free.

Be sure to check out our Star Investor portfolios which comprise the top holdings of some of the most successful investors out there, including Warren Buffet, Dan Loeb, Seth Klarman and many more.

Important Notice:

This article is not to be understood as a recommendation to buy any of the stocks that are mentioned in it. Please conduct your own research before making investment decisions. To this end, we aim to provide you with the best portfolio management tool and investment research data possible. However, we cannot guarantee the accuracy of this information in spite of our extensive efforts to ensure that the data is complete and 100% accurate.

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