When it comes to choosing what stocks to put into your investment portfolio, cheaper can sometimes mean better. For relatively more affordable stocks, the market doesn’t have to be at an all-time high, nor do other conditions need to be excessively favorable for a rally to happen. This happens to be the driving force behind Sound Shore’s managers, who have managed to surpass around 90% of their contemporaries over the past decade and a half. The group may have fallen behind this year, but on the upside, its figure-centric and disciplined approach makes its growth possible in today’s market.
The people behind Sound Shore establish their investments by identifying 250 medium-sized and large-scale companies that have the smallest P/Es in comparison to their respective record norms, as well as the market as a whole. After this, they examine the companies for potential profit growth and pick out the ones that are most likely to go beyond expectations, in addition to making huge profits. This approach has given Sound Shore considerable stakes in Microsoft stock. Half of their portfolio spans three sectors: technology, finances, and energy.
The possible downside to buying into Sound Shore funds is its limited number of stocks, with only 40 overall, in comparison to 115 for the average fund – the comparatively low number of stocks in the roster may spell disaster because it doesn’t buffer against losses as well as funds with thrice the number of picks. If a couple of these picks should drop, the value of the entire portfolio could suffer along with them. The good news is that, historically, Sound Shore has exceeded expectations by over five points every year for the past ten years.
Thinking of investing in cheap stocks? Your chances of financial success and sustained profits are good, especially because even small improvements in market conditions can give your stocks a big boost. Talk to your investment analyst to see if low-priced stocks are a viable addition to your investment portfolio.
Puritan Financial Group has years of experience in dealing important financial decisions. Puritan Financial Group will listen to you and your loved ones and craft a custom financial solution that supports your life goals.