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Value Investing

Why Value Stocks are Truly 'Worth It'

Value stocks earned their name for a good reason: they provide value for investors regardless of the state of the economy.

Value stocks are stocks that tend to trade at a price lower than their fundamentals suggest they should. Buying them is just like buying something for $0.80 that you know is really worth $1.00, and will be able to be sold for $1.00 eventually.

The best value stocks have high dividend yields, low price-to-earnings ratios or low price-to-book ratios. In short, value stocks are stocks trading for less than they are worth.

The trick is finding them. Value investing requires research and the ability to 'go against the grain', not simply picking a stock that’s popular. A good place to find value stocks is by scanning the Value Line Investment Survey for stocks selling well below their “blue book value”.

Other value stock candidates are companies with a history of success that may be going through a period of temporary turmoil, thus scaring off some investors and becoming undervalued. The market tends to overreact to news – good or bad.

Value stocks may not grow their earnings as quickly as growth stocks, or be as safe as income stocks. Estimating a company’s true worth can be difficult for value investors to do. But if they’re bought at a big enough discount value stocks give investors a good chance to make a nice profit on their investment.

Daily Chart Analysis: Las Vegas Sands Stock (NYSE: LVS)

Las Vegas Sands (NYSE:LVS) appeared on my bearish scan last night and there were several things that stood out about the stock. On the daily Las Vegas Sands stock chart we see the company is struggling to move back above its 50-day moving average. The trendline has served as support and resistance in the past [...]

Daily Chart Analysis: Vertex Pharmaceuticals Stock (Nasdaq: VRTX)

Over the last few months, the pharmaceutical sector has been among the worst performing sectors. From March 4 through April 11, the Market Vectors Pharmaceutical ETF (NYSE: PPH) dropped 7.3% compared to a 3.1% decline for the S&P 500. The recent selloff has brought a number of pharmaceutical stocks down to oversold levels on their [...]

Why I Prefer the Tried & True Over the Exciting & New

In his new book Antifragile: Things That Gain From Disorder, Nassim Taleb coins a new word “neomania” to label the mistaken belief that newer is better. I see many investors afflicted with neomania, and I understand the affliction. What’s new instills a sense of optimism and limitless potential.  Getting in on Microsoft’s (NYSE: MSFT) initial [...]

Top Hedge Fund Pick with 75% Profit Potential

It’s prudent to be cautious when a hedge fund manager takes to the airwaves to tout an investment idea…particularly when that investment has already risen considerably. At the Robin Hood Investor Conference last month, some of the top hedge fund managers, including Bill Ackman, Ray Dalio and David Einhorn, presented their top investment ideas. I [...]

Argentina Alert: 53% Gains in 4 months

As the legendary 18th-century banker Baron Rothschild wisely counseled, “Buy when there’s blood in the streets.” Many of the world’s best investors do just that. They buy when everyone else is selling. As a result, they invest in good assets at a deep discount to their true value. You’ve probably heard the negative news headlines [...]

Guy Gottfried: Canada’s Top Undiscovered Investor

One of Canada’s most influential value investors stood at a podium in front of a few hundred people at a conference in Las Vegas last month to deliver his next compelling investment idea. Four times in the previous two years he had stood at that podium, presenting a total of six stock picks. All six have been winners, producing an average return of 80%. [...]

GMCR on Quite a Tear

Remember when Green Mountain Coffee Roasters (NASDAQ: GMCR) was going nowhere? That was five months ago. Today, GMCR shares are pricier than they’ve been in over a year.

Is Apple Shortchanging its Investors?

Renowned hedge fund investors David Einhorn may have just exposed Apple (NASDAQ: AAPL) for being something we don't normally associate with the world's richest company: cheap.


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