Value stock investing is solid and sexless right? Not necessarily.
It's not always easy to determine if a stock is selling under the inherent value or simply dying. It can also be difficult to determine when - or if - a stock will reach its full potential; disruptive technologies, legislation and other market forces can dramatically alter the landscape of any potential stock.
Originally attributed to Benjamin Graham, the grandfather of value investing, the goal is to buy stock in companies selling below book or appraised value. Value investing requires the ability to evaluate the intrinsic value of a company against the share price. Use the following as a foundation:
- Price to Earnings/ PE Ratio
- Dividends
- Book Value
- Cash flow