John Buckingham is AFAM Capital’s Chief Investment Officer and has served as the firm’s Director of Research since 1989 and Chief Portfolio Manager since 1990. He leads a team that scrutinizes hundreds of stocks for money management clients and newsletter subscribers to The Prudent Speculator investment newsletter, of which he is the Editor. “The strategy that we utilize has been pretty much the same since the newsletter began in 1977. We buy a broadly diversified portfolio of undervalued stocks and patiently hold them through thick and thin.”
Even at all time highs, John Buckingham is finding undervalued gems. “We’ve got lots of stocks that we like. Another name that hasn’t performed well this year is Disney (NYSE:DIS), which of course most people are familiar with. For Disney, the concern about the company is in its ESPN networks and the fear that people will continue to cut the cord, while they’ve had to spend a fortune for content in terms of the contracts they have with professional sports leagues. So the profitability of ESPN is troublesome and problematic. But Disney right now is trading around 16 times estimated earnings, which is very low relative to where it has historically traded.”
Mr. Buckingham is sanguine about the prospects of the market in the near term: “…you can’t look at valuations on stocks in a vacuum when we’re in a completely different environment today given where your choices are to put your money. And looking at dividend yields, S&P 500 offers a little less than 2%, while the yield on our portfolios is about 2.5%. I’d much rather get a 2.5% yield on stocks than put my money in a 10-year Treasury getting 2.3%, as I get a greater income stream out of equities, and I get substantial capital appreciation potential.”
To get a complete picture of John Buckingham’s value stock picks in today’s market, read the entire interview exclusively in the Wall Street Transcript.
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