Value Investing Strategy: Your Guide to Spotting Undervalued Market Leaders

Value Investing was such a challenge for me . Going through the financial statement of a company and then using Discounted Cash Flow to find out the Stocks which are available at a discount .

Value Investing Strategy

But, then I found out a simpler way of finding out the Diamonds in a coal field.

So, I will write down the step by step process to follow to get hold of such Equities. This method is for investing and not for trading. The system needs to be run once in a month (will add the python implementation at the end). There is nothing called as stoploss in this strategy. It is buy and forget strategy because you will never get that stock at that cheap price once you miss the opportunity.

Step 1 :

1. Look for companies which has high probability of surviving beyond 10 years (In India , any Large cap or most Mid Caps or Nifty100 Stocks).
2. Low to No debt
3. Average growth rate of 10% to 15% in past (Large Cap) or 15% to 20% (Small Cap)
4. Sustainable Return on Equity and Good Management (This is subjective)

Step 2 :

1. Open the Chart of the Company (Monthly Time Frame) and select the 50 SMA (Simple Moving Average)