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How Many Stocks Should You Own?

Welcome to Episode #448 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.There’s a question which every investor should ask, not only value investors, which is: how many stocks should y…

(0:20) - How Big Should Your Portfolio Really Be?
(4:00) - Diversifying Your Investments Depending On Your Portfolio
(12:45) - Finding Strong Investments For Your Watchlist Right Now
(32:30) - Episode Roundup: HRMY, NVDA, VLO
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Welcome to Episode #448 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.

There’s a question which every investor should ask, not only value investors, which is: how many stocks should you own?

Berkshire Hathaway’s Ted Weschler has said in interviews about his multi-million-dollar Roth IRA that he grew it by concentrating on a few winning positions.

Warren Buffett himself has said in interviews that an investor can be “diverse” with as few as three stock positions.

But all of us aren’t Warren Buffett, who has the opportunity to closely vet the companies he buys.

Studies of “average” investors have shown that there can be diversity with a stock portfolio between 10 and 20 stocks.

What is “Diversity” and why is it Important for Investors?

You can own 30 stocks and believe that you are spreading your risk, but if all the companies are in the same sector, you probably aren’t that diverse.

Additionally, what if you own all large caps? Currently, large cap stocks are outperforming the small cap stocks, and have been for a few years in a row, but what happens when the small caps come back into favor?

If you own a portfolio with all large cap stocks, you will underperform.

Diversity means owning stocks in many different sectors and industries as well as owning a mix of market caps. It’s easy to think the latest red-hot industry will always be hot. Many investors thought the banks were “safe” in the early 2000s.

For most investors, it’s best to follow the adage: “don’t put all your eggs in one basket.”

Owning Value and Growth Stocks

While this is a podcast devoted to value stock investing, even value investors should be diverse. There’s no reason for value investors to eschew growth stocks completely.

Buying companies that have both growth and which are still values is the best of both worlds.

Screening with the PEG Ratio to Find Cheap Stocks with Growth

To find companies that have growth but are also attractively valued, Tracey screened with the PEG ratio. The PEG ratio is the price-to-earnings (P/E) ratio divided by the earnings growth.

A PEG ratio under 1.0 usually indicates a company has both growth and value.

But just looking for a low PEG ratio isn’t enough. Tracey screened for the Zacks Ranks of #1 (Strong Buy) and #2 (Buy) as well. A high Zacks Rank usually means the analysts are raising earnings estimates. That’s a bullish sign.

The screen also looked for stocks over $5 as well as those with Average Broker Recommendations under 2.5.

This screen returned just 18 stocks.

3 Stocks with PEG Ratios Under 1.0

1. Harmony Biosciences Holdings, Inc. (HRMY)

Harmony Biosciences is a pharmaceutical company which is developing therapies for patients with rare neurological diseases who have unmet medical needs. On July 16, 2026, Harmony pre-announced record quarterly revenue for the second quarter and reaffirmed its 2026 revenue guidance of $1.0 to $1.04 billion, a company record.

Harmony Biosciences produces WAKIX for narcolepsy. Earnings are expected to rise 21.8% in 2026. It’s cheap, with a forward P/E of just 10.8. A P/E under 15 usually indicates value.

Shares of Harmony Biosciences are down 5.6% year-to-date even with record quarterly revenue. It reports its full second quarter results on Aug 4, 2026.

Harmony Biosciences is a Zacks Rank #1 (Strong Buy).

Should a cheap pharmaceutical company with double digit earnings growth like Harmony Biosciences be on your short list?

2. NVIDIA Corp. (NVDA)

NVIDIA made it into a value stock screen and is being featured on the Value Investor Podcast? What is the world coming to?

This $5 trillion market cap GPU juggernaut is expected to grow earnings by 90.6% in fiscal 2027 even after growing earnings 59.5% in fiscal 2026. The Street, and skeptics, keep waiting for earnings growth to slow. But, instead, it’s accelerating.

Shares of NVIDIA are up just 10.5% year-to-date, however. It trades with a forward P/E of 23. While that’s not a classic valuation of 15 or under, for NVIDIA, that’s a historically low P/E ratio.

Because of the massive earnings growth, NVIDIA sports a PEG ratio of just 0.39.

NVIDIA is a Zacks Rank #1 (Strong Buy).

Should value investors be accumulating shares of NVIDIA right now?

3. Valero Energy Corp. (VLO)

Valero Energy Corp. manufactures and markets petroleum-based and low-carbon liquid transportation fuels and petroleum products in the US, Canada, the United Kingdom, Ireland and Latin America. Valero operates 14 petroleum refineries with a combined throughput capacity of about 3 million barrels per day.

The crack spreads have risen during the Iran War which means so have Valero’s earnings estimates. 2026 earnings are expected to jump 230% this year to $35.11 from $10.61 last year.

Shares of Valero are up 86% year-to-date but it’s still cheap. Valero has a forward PE of just 8.7. When you combine it with explosive earnings growth, you get a PEG ratio of just 0.21. Valero has the rare combination of growth and value.

It will report second quarter earnings on July 30,2026.

Valero is a Zacks Rank #2 (Buy) stock.

Have investors missed their chance to buy Valero earlier in the year or is there still more upside?

What Else Should You Know About Stocks with Value and Growth?

Tune into this week’s podcast to find out.

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