Are You Really an Investor? - Investment Ideas
05 Maggio 2011 - 2:00AM
Zacks
Are you really a long-term investor?
I have seen plenty of people claim to be an investor for the
long haul, yet fall victim to classic errors of long-term
investing, my self included. Myopia is the biggest pitfall.
Being overly involved in short-term fluctuations is a surefire
way to limit your long-term potential. I am not saying you can't
find success in trading, but it requires a very different
approach.
Get Some Ear Plugs
Technology has made advancements in all facets of society. But
the recent decades have seen the rate of information flow grow by
leaps and bounds. Real-time quotes, rapid-fire emails and press
releases posted instantly across the web. Furthermore, now we can
get everything, EVERYTHING, sent right to our phones. We can comb
through data instantaneously, no matter where we are or what we are
doing.
For traders, those technologies can be a godsend. But for
investors they can be a nightmare. How are we supposed to filter
out all of the noise that doesn't matter for long-term
investors?
For example, the weekly initial claims report can be keyed on by
some day traders, but why should blue-chip dividend collectors
care? Rather, they should be only looking at the monthly non-farm
report, even then it is not always necessary.
Zoom Out!
If you really are buying stocks with a long-term horizon, do
just that. Take a step back from the rapid fire data and focus on
the macro events.
Secondly, stop checking the index movements so often. The past
couple weeks make that tough. Look at this chart, it looks down
right scary to some people.
![](http://www.zacks.com/images/upload_dir/1304614488.jpg)
But compare that move to the market moves over just the past
year.
![](http://www.zacks.com/images/upload_dir/1304614438.jpg)
Or better yet, 5 years! The recent weeks of volatility hardly
even registers.
![](http://www.zacks.com/images/upload_dir/1304614460.jpg)
So, What Should We Do?
Long-term does not necessarily mean that you can't be
aggressive, everyone's risk tolerance varies. But, if you would
like some more stability, just stick to the basics.
Here are a few stocks that have cheap valuations, decent growth
projections over a 5-year period and a Zacks #2 Rank (Buy) or
better.
Chevron Corp (CVX) is a Zacks #1 Rank (Strong Buy) that
has a lot going for it. Shares of CVX are trading at just 8 times
this year's estimates and earnings are expected to grow at 12% over
the next 3-5 years. Alternative energy is great and will happen at
some point in the future, but you better believe it’s going to be a
while. And, companies like CVX will see the writing on the wall
well ahead of that time and I am very willing to bet they, and
other similar companies, will be just as big in that space.
Probably through M&A. After all, they see themselves as energy
companies, not just oil companies.
Timken Co (TKR) makes anti-friction bearings and similar
products in the U.S. and Europe. Their end markets are fairly
diversified and with a market cap of over 5 billion, there
shouldn't be any "going concern" worries.
Shares have a Zacks #1 Rank and fantastic growth expectations.
Earnings should grow upwards of 14% annually and the forward P/E is
only 13 times. That puts the PEG ratio at 0.9, a bargain.
Textainer Group (TGH) is the largest intermodal container
lessor in the world. The company also sells used containers to over
1,000 customers.
Estimates have been creeping higher, putting shares at a Zacks
#1 Rank and the forward P/E at just 11 times this year's estimates.
Throw in a 12% annualized long-term growth rate and you have
another PEG ratio of 0.9.
Just about everything that is worn, eaten, used, etc has been on
a combination of trucks, trains and ships. That is one thing that
will not change any time soon. So what better choice than a company
that is in that business?
Tip of the Iceberg
These are just 3 examples of the hundreds or thousands of stocks
out there that would make suitable investments. Remember, if you
truly are a long-term investor ignore the short-term noise and keep
your eyes on the prize.
Bill Wilton is the Aggressive Growth Stock Strategist for
Zacks.com. He is also the Editor in charge of the Zacks Small Cap
Trader service
CHEVRON CORP (CVX): Free Stock Analysis Report
TEXTAINER GROUP (TGH): Free Stock Analysis Report
TIMKEN CO (TKR): Free Stock Analysis Report
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