I'm Adding More 'Value' to My Portfolio
Here are two more stocks — a cloud communications name and pharma company — I'm adding now.
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In my recent columns, I have focused on the value stocks and how they are outperforming their growth brethren. The high-growth technology sector with many software stocks being treated like the proverbial red-headed stepchild. This part of the market is trading with its lowest collective price-to-earnings in over a decade. The software-as-a-service companies have been trashed on growing fears AI will trigger a huge disruption to the industry.
As of yesterday’s close, the performance gap between the iShares S&P 500 Value ETF (IVE) and the iShares S&P 500 Growth ETF (IVW) is roughly 6.5% through the first seven weeks of 2026. In Tuesday’s column, I highlighted Ford (F) and Upwork, Inc. (UPWK) as good value plays. The management at Upwork must hold my view on the company’s undervaluation in the market. It announced a massive $300 million buyback program on Wednesday, which would retire more than 15% of the float in the stock if fully executed at current trading levels.
In today’s column, I will profile two other value names I have added to in recent weeks via covered-call orders. My longer-term followers know that Acadia Pharmaceuticals (ACAD) has been one of my favorite rinse, wash and repeat covered-call positions for years now. I executed some new covered-call orders on ACAD last week after the stock was sporting a 15% decline in 2026 on no real news. The company has two products on the market that are showing solid growth. The company crossed the $1 billion in annual sales milestone in fiscal 2025. Acadia should continue to grow profitability at a nice pace as sales grow in the low teens over the next few years. The company also has a rock-solid balance sheet.
Bandwidth, Inc. (BAND) is a much newer entrant into my portfolio after I took an initial position in this global enterprise cloud communications company late in January of this year. The stock had been hit by some of the AI disruption concerns that have washed across the SaaS sector this year.
But the stock had a nice bounce in trading on Thursday after reporting fourth-quarter results before the bell. Management also issued encouraging guidance calling for 16% sales growth in fiscal 2026. It also sees a 30% rise in adjusted earnings before interest, taxes, depreciation, and amortization in this fiscal year. The cherry on the top was the announcement of a new and first $80 million stock buyback authorization program. This would amount to more than 15% of the outstanding float in the shares at current trading levels.
If leadership is concerned about AI disrupting its business model, it sure isn’t showing it. Even after yesterday’s 12% rise in trading, the stock is trading with a free cash flow yield in the low teens with a forward price-to-earnings ratio of roughly 7.5-times. The very definition of a value stock in an overbought market.
At the time of publication, Jensen was long ACAD, BAND, F, UPWK.
