Value stocks

How to spot value stocks with real value

This week, Kate’s guest is Sean O’Hara, director of Pacer Financial, which manages a number of ETFs representing various asset classes, regions and investment themes. Sean talks specifically about the Pacer US Cash Cows 100 ETF (COWZ), which uses free cash flow yield to identify high-potential companies. This approach has worked well recently, with the fund returning 43% in 2021, compared to a 26.44% return for the S&P.


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Sean also discusses the characteristics of specific stocks within this portfolio.

Topics covered include:

High Free Cash Yield – what is it, how is it calculated and why does Sean like it as a mechanism to assess top performing stocks

How Sean’s company COWZ ETF identifies companies with high free cash flow yield

What has changed since Fama and French won their Nobel Prize in economics, and why should investors be looking at different fundamental metrics than they did decades ago?

Why so many companies today are valued with intangible rather than tangible assets.

What sectors is Sean increasing his exposure to, given the current market environment and high inflation?

How Sean’s approach resulted in a 43% return last year, with the P/E ratio never exceeding 13. This means the stocks he buys are cheap relative to their peers, based on free cash flow yield.

Which sectors is Sean’s fund currently overweight?

What traditional dividend-paying sector does Sean’s fund typically avoid?

Which materials and commodities stocks from the old range fit the fund’s selection criteria and have shown strong performance lately.

Why the war in Ukraine is boosting the performance of one of Sean’s portfolio companies

Why a stock long considered a tech growth stock is now a value game, based on its multiples.

How Sean adds profitable stocks at a discount.

Why McDonald’s a few decades ago is a model for the slow growth of other companies today.

How an old-school tech company in Sean’s portfolio is reinventing itself in the age of cloud computing.

Pacer ETFs

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