The technology stocks are hitting new highs again but, strangely enough, so are some of the "old economy" stocks, such as those in manufacturing, chemicals and the railroads.
That's a good sign for this rally but investors who are over weighted in technology should really think about diversifying their portfolio.
For example, Apple Inc. AAPL has been a great performer over the last 10 years even as it has been among the cheaper of the big technology companies. Shares are up over 1200% since 2009.
However, while Apple used to trade around 10x, is now trading with a forward P/E of 18.3. It's simply not that cheap of a stock anymore.
But what about the old economy stocks? Are any of them still values? Tune in to the latest edition of the Zacks Value Investor Podcast to find out.
Screening For Cheap Old Economy Stocks
There's no easy way to screen for "old economy" stocks, as they aren't really a specific segment of the stock market, per se. There's no good definition about what that means.
But you can run a screen which includes the Zacks Rank of #1 (Strong Buy) and #2 (Buy), in order to get stocks with rising earnings estimates, and then use a value fundamental like a P/E under 15.
In order to get the "old economy" part though, you will have to screen using different sectors or industries.
For this screen, different sectors were added to find cheap stocks. They may not all have been "old economy" though and a couple of Tracey's favorites didn't make the screen.
For instance, Crane CR is cheap enough, with a forward P/E of just 13.9, but it's a Zacks Rank #4 (Sell) right now as it hasn't reported earnings yet. With that rank, it couldn't make the screen.
Still, the number of stocks that came through this screen when it was run for various sectors, was small.
Three that made the cut are H&E Equipment Services, Inc. HEES, Macquarie Infrastructure Corp MIC and Norwegian Cruise Line Holdings Ltd NCLH.
Remember, the Zacks Rank will be volatile during earnings season as the analysts adjust their earnings estimates. To account for this, these screens should be run multiple times during earnings season.
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