I’m a value investor at heart. I buy world-class, steady companies with huge (and growing) dividends at value prices. In doing so, I receive a handsome stream of passive income via dividends that I will one day utilize for my living expenses. Sometimes, however, I take on a little extra risk and buy deep value companies. Today’s video covers the difference between value stocks and deep value stocks, and how I approach each a little differently in my personal stock portfolio. I explain my strategy via two practical examples, Campbell Soup Company (CPB) and BP (BP).

In prior investing videos, I’ve explained my stock portfolio strategy and how I have small/ancillary, medium, and large/core positions. It also happen to sub-segment on value vs. deep value.

Value stocks are the bread and butter of my portfolio. Fundamentals are almost always in-tact. They will sometimes face corrections, but never too large. I’m talking about companies like PepsiCo (PEP) and 3M (MMM), both companies that I personally own.

Deep value, by contrast, are more speculative positions. They are still world class dividend companies, although they have fallen on hard times. Long-term fundamentals are still strong, although short-term fundamentals can face a few challenges. I sometimes take calculated risk with such holdings, with the goal of amplifying my long-term results.

I enjoy sharing two examples in today’s video to explain my strategy via example.

Campbell Soup Company (CPB):
* This one is starting to enter deep value territory, in my opinion.
* It’s there for a reason, as is almost always the case with deep value stocks.
* Facing challenges in their core soup business, CPB has gone on a buying rampage over the last five years. They have acquired: Bolthouse Farms (.55 billion), Plum Organics, Kelsen, Garden Fresh Gourmet, and Synder’s Lance (huge .1 billion acquisition).
* Since CPB did not issue new shares (in fact share count is down), they approached these acquisitions via debt. Debt is now at a very high level and will take years to pay down. This is one of the big reasons, in my opinion, that CPB is in deep value territory.

BP (BP):
* When I bought back in September of 2015, oil was at per barrel. Then, it went down to in 2016. BP does not make money at those levels.
* I took on calculated risk, with the expectation that oil would eventually recover.
* Certainly this was a risky move at the time, but it paid off handsomely with my yield on cost at over 8% just a few years later.

While deep value will never be more core strategy (CPB is less than 1% of my portfolio), it plays an important role. And, I’m always on the hunt for great value stocks out there, ones that have a dividend focus!

Want to learn more about my #2 favorite stock of all time, PepsiCo? Check out this video:

Want to learn about my brand new position in 3M? Check this one out:

Want to learn about my calculated risk taking with BP? Here you go:

Want to watch my recent Campbell’s Soup video? Here it is:

Last, learn about my thoughts on General Mills, another deep value, here:

Disclosure: I am long PepsiCo (PEP), 3M (MMM), Campbell Soup Company (CPB), General Mills (GIS), and BP (BP). I own these stocks in my portfolio.

Disclaimer: I’m not a licensed investment advisor, and today’s video is just for entertainment and fun. This video is NOT investment advice. Also, I’m not a tax advisor and today’s video is NOT tax advice. Please talk to your licensed investment advisor before making any financial decisions.

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