Value Investing

Value Investing is investing in stocks which have fallen out of favor with the general market.

The first step in picking a value stock is financial statement fundamental analysis. For proper fundamental analysis to, find a value investment, three vital ratios must be determined:

  • Price to Book Ratio
  • Debt to Equity Ratio
  • Price to Earnings Ratio

However, thorough financial statement analysis requires that one must also ensure that the continued operations are sustainable. Working capital for continued operations must be available.

Some stock analysts go a step further and insist that a stocks price must be within a certain range of net current assets.

Other stock analysts go even further and require a certain level of free cash flow.

Provided in the links above (so you dont have to do all the work yourself) are value stocks lists on which fundamental analysis has been performed.