“For some reason, people are more focused on price rather than value. Price is what you pay. Value is what you get.” – Warren Buffett
The stock markets continue to pull away from the real economy in June. The Nasdaq index has already tested an all-time high, with the S&P500 and Dow pulling up. Is it possible to find undervalued companies today and does value investing strategy even work?
When managing capital, I combine a value investing strategy with a search for promising fast-growing companies. But today we will talk about a classic example of a value strategy.
Value Investing, the brightest representatives of which are Warren Buffett and Peter Lynch, is looking for undervalued companies. The market ignores them, so the value investor can buy shares cheaply and earn when they return to fair value.
I keep hearing that the value strategy no longer works because of the general availability of information. However, this is not true, and there are undervalued value stocks in any market, both declining and rising.
Let’s look at how the stock price has changed against the S&P500 index (SPX) since 2015:
The main multipliers for the fundamental analysis of shares
Fundamental analysis, the basis of value investing, begins with the evaluation of multiples. This method allows us to find undervalued ...