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 […]
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.
By Ian Wyatt | Dec 5, 2013
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 […]
By Steve Mauzy | Oct 25, 2013
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 […]
By Ian Wyatt | Jun 12, 2013
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%. […]
By Chris Preston | Apr 11, 2013
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.
By Ian Wyatt | Feb 26, 2013
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.
By Ian Wyatt | Oct 2, 2012
David Einhorn -- the veritable grim reaper in the investment world -- slammed Chipotle (NYSE: CMG) at the Value Investing Congress this morning. That doesn't bode well for the stock's future.
By Ian Wyatt | Sep 20, 2012
Starbucks (NASDAQ: SBUX) just entered the single-serve coffee market. Yes, the same single-serve market Vermont’s own Green Mountain Coffee Roasters (NASDAQ: GMCR) has dominated the last few years.
Perhaps no longer.
By Ian Wyatt | Sep 19, 2012
A year after his negative outlook on Green Mountain Coffee Roasters (NASDAQ: GMCR) sent its stock on a downward spiral, powerful hedge funder David Einhorn is set to speak again at the Value Investing Congress. Which company will feel his wrath this time?
By Ian Wyatt | Mar 12, 2012
Green Mountain Coffee Roasters (Nasdaq: GMCR) could use a wake-up call. The Vermont-based single-serve coffee brewer fell 22.5% last week.