Key Takeaways
- Growth stocks have been hot for a decade, but what happens when they are not?
- Be cautious of sequence of return risks which is selling stocks into a bear market.
- Consider diversifying into value stocks like Magna, Allstate and Columbia Sportswear.
- (1:00) – What Can We Apply From The Dot-com Stock Bust To Create A Winning Portfolio Today
- (18:30) – Where Should You Be Looking For Strong Value Investments?
- (38:00) – Episode Roundup: MGA, ALL, COLM, DECK
- Podcast@Zacks.com
Welcome to Episode #433 of the Value Investor Podcast.
Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio, shares some of her top value investing tips and stock picks.
Growth stocks have outperformed value for a decade. Large cap stocks have outperformed small caps for years as well. As a result, many investors have gone with what’s working, which is large cap growth stocks, especially technology.
But the 1990s and 2000s, which encompassed the dot-com boom and bust, provides lessons on what can happen when you don’t diversify. It can also provide lessons on what happens when you are taking money out of your stock portfolio during a bear market.
Blast from the Past Personal Finance Radio Program
In 2025, Tracey heard a pre-recorded personal finance program from Bill Geiger on a Chicago all-news radio station, which turned out to be from 2012. In it, a couple retired in 2000 at age 65. They had $1 million in their portfolio. It was apparently invested in growth stocks, as those had been red-hot in the prior decade.
The couple wanted to take $50,000 a year out of the portfolio, which would have been 5%. Unfortunately, the stock market finished lower in 2000, 2001 and 2002. By 2003, their portfolio was down to $497,000.
The story goes on. Tune into the podcast to find out where they stood in 2012.
This is the sequence of return risk for investors. It can happen anytime you are selling stocks from your portfolio at the same time there is a stock market sell-off.
Lessons from the Dot-com Stock Bust
- Be diverse. Own growth stocks but also own value.
- Own a mix of caps and industries. Own small caps along with large caps. Own industrials and transports along with technology. Don’t put all your eggs into one basket.
- Talk with your financial advisor about methods to abate the sequence of return risk in your own portfolio. Every investor has different goals. Make a plan for bull, and bear, markets.
3 Strong Buy Value Stocks for Your Short List
These three companies are on Zacks’ list of #1 (Strong Buy) stocks, which is Zacks’ highest recommendation. At the time of the podcast, there were only 203 stocks which were Strong Buys, out of over 4,000 stocks with the Rank.
Tracey also looked for companies with a Zacks Value Style Score of A, which is the highest style score. It did not disappoint, as all three stocks are cheap on the fundamentals, such as price-to-earnings (P/E) ratios.
1. Magna International Inc. (MGA – Free Report)
Magna International is the largest automotive supplier in the world. It has customers in North America, Europe and China. Magna currently has a strategic collaboration with NVIDIA.
Shares of Magna were rallying in 2026 but have fallen 4.7% in the last month on the Iran War weakness. Magna’s earnings are expected to turn around. The Zacks Consensus is looking for earnings growth of 19% in 2026 and another 17% in 2027.
Magna is dirt cheap. It trades with a forward P/E ratio of 8.3. A P/E under 10 usually indicates deep value. Magna is shareholder friendly and currently pays a dividend, yielding 3.5%.
Magna is a Zacks #1 Rank (Strong Buy).
Is it time for value investors to get back into the auto stocks like Magna International?
2. The Allstate Corp. (ALL – Free Report)
The Allstate Corp. is a property and casualty insurer. While earnings are expected to fall 27.1% in 2026, 5 earnings estimates were raised in the last 30 days and 1 in the last week. That has pushed up the 2026 Zacks Consensus to $25.40 from $24.86 just 30 days ago. This is a bullish signal. No estimates have been cut in that same period.
Shares of Allstate have been in a narrow trading range for the last year. It’s up just 2.1% during that time. But Allstate is cheap. It trades with a forward P/E of just 8.1. Allstate also pays a dividend, currently yielding 2.1%.
Allstate is a Zacks Rank #1 (Strong Buy).
Should value investors consider a property insurer like Allstate in 2026?
3. Columbia Sportswear Co. (COLM – Free Report)
Columbia Sportswear designs and markets outdoor, active and lifestyle products including apparel, footwear, accessories, and equipment. It has four primary brands: Columbia, Mountain Hardwear, SOREL and prAna.
Given tariffs and concerns about consumer spending, it’s not surprising that analysts believe Columbia Sportswear’s 2026 earnings will decline 6.2%. But they expect a rebound of 17.1% in 2027.
Shares of Columbia Sportswear have fallen 12.7% in the last month and are near 5-year lows. It’s cheap, with a forward P/E of 15.9. A P/E of 15 or lower usually indicates value. Columbia pays a dividend which is currently yielding 2.2%.
Columbia is a Zacks #1 Rank (Strong Buy).
Is it time to look at some of the beaten-down retail stocks like Columbia Sportswear?
What Else Should You Know About Lessons from the Dot-com Stock Bust?
Tune into this week’s podcast to find out.
