Cheap Stock or Value Trap? - Value Investor Episode 2

Learn More About Zacks Value Investor Trading Service: In this episode, Tracey covers the value investor’s problem of determining whether or not a stock is actually cheap or if it’s a value trap. There are a lot of stocks that are trading with low P/E ratios but they’re not all great deals. Tracey discusses: 1. What’s the definition of a value trap? 2. Tips on how you can easily distinguish between a cheap stock and a value trap She provides 4 examples of a cheap stock. They all have forward P/Es well below the overall market and also well under the level she uses to find value stocks, which is a forward P/E of 15. But are these also value traps? 1. Greenbrier (GBX): the railcar maker with a forward P/E of just 5.4 2. CF Industries (CF): nitrogen products manufacturer with a forward P/E of 14 3. General Motors (GM): automobile manufacturer with a forward P/E of 5.6 4. Apple (APPL): technology gadget maker with a forward P/E of 11.7 If they are a value trap, should you be buying them anyway? Tune into this week’s podcast to find out. Greenbrier: General Motors: CF Industries: Apple: Follow us on StockTwits: Follow us on Twitter: Like us on Facebook:

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