A Step-by-Step Guide to Picking the Best Value Stocks

Plus, why you should avoid the most undervalued stocks

Todd Lincoln, MBA
Investor’s Handbook

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Photo by Markus Spiske on Unsplash

I’m a big fan of value investing. It has a long history of successful outperformance, and in today’s volatile market, there are opportunities everywhere.

So, today I’m going to cover four important questions about value investing:

  1. What are value stocks?
  2. What should you know about investing in value stocks?
  3. Which value stocks perform best?
  4. How do you find the best value stocks to buy? (A step-by-step guide)

What Are Value Stocks?

What exactly is a value stock?

“Value stocks” describes an investing strategy that looks for companies currently trading below what they’re really worth.

In other words, value investing tries to buy good stocks on the cheap.

There’s no strict definition of what makes a company a value stock, and technically any company could be a value stock at any time.

For example, if a stock had a fair value of roughly $100 per share, but was trading for $120 per share, you would call it “overvalued.” However, if the very next day the stock sold off by 33% so…

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Todd Lincoln, MBA
Investor’s Handbook

Stock-market investor, battle-scarred entrepreneur, and fireside philosopher. Creator of Investor’s Handbook: https://medium.com/the-investors-handbook