Getting into Value Investing
The strategy of value investing consists of investors who buy quality stocks at perceived bargain prices. It is similar to going shopping for sales, but in this instance you are hunting down bargains for stocks.
When looking for value stocks, search for companies that are profitable but undervalued by the stock market. The market is susceptible to fluctuations and volatility of stock prices, however the quality of a company tends to be less volatile in the long run. A technique to find quality stocks is to examine the price to earnings ratios of a company. This P/E ratio represents the relationship between the price per share and the company's earnings per share. Choose stocks with a low P/E ratio, and which have a high return on capital.
Photo source mudpig