ValuePicks Value Investing

Value investing is a contrarian investing style that involves buying stocks that are currently out of favor. The value investor seeks to identify stocks that are currently trading below their net asset value (the company's assets minus their liabilities). Value investors look to purchase the stock below the company's book value per share and at the bottom of the stock price cycle.

Value stocks may be trading at lower levels for multiple reasons: recent earnings miss, weak sector performance, poor management, etc. Since the company's assets are retained, the company is worth more than the stock price is indicating.

Value investing is a buy and hold strategy that involves waiting for the stock price to turnaround. Because of this, it is not an appropriate short term trading strategy. There is also no guarantee that the stock price will rebound at all.

Our formula uses the following indicators:

Low Price to Book Ratio
High Dividend Yield