Value Investing Basics

Value Investment Selection
In order to determine whether a stock is qualified as a value one, you should look for these basic criteria:

1.The Price to Earnings (P/E) Ratio
It should fall in the 10% of the lowest that is typical for the sector in which the company falls.

2.The Debt to Equity Ratio
It should not be greater than 1.

3.The PEG
It should not be greater than 1. This shows that the stock has been overlooked by the market and as a result its value is below its real one.

4.Earnings Growth
A record of consistent Earnings Growth should be provided over a long period of time. You should look for an earnings growth from 6% to 8% for a 7 to 10-year time period.

5.Stock Price
The price you pay for the stock should not exceed 70% of the intrinsic per share price of the stock.

6.The Price to Book ratio
It should not be greater than 1.



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