Value investing is an investment strategy. A trader uses this technique to select Mid & Small Cap stocks for trade which are undervalued. It is one of the proved investment strategies.
1 Year Return
3 Years Return
Value investing is an investment technique. By using this technique trader select the Mid & Small Cap stocks for trade which are undervalued or below their intrinsic value. Investors who use this strategy believe that the Mid & Small Cap stock is fundamentally good but it overreacts to the good and bad news.
Value investing is one of the proved investment strategies. These stocks give an opportunity to make a profit.
Is it safe to invest in undervalued Mid & Small cap stocks ?
Buying fundamentally good stocks at lower price gives a better chance to earn a profit. These stocks are very safe for investment. The margin of safety is the basic and one of the important key for successful investing.
These socks have a very good margin of safety. So, if you invest in these stocks there is most probable chance that you will get good profit.
Value investing is a long-term strategy, as opposed to trading. It requires a lot of discipline and patience. If you use this strategy then sometimes you have to wait for years to get a good profit.
Value investing performance
Value investing is one of the proved investment strategies. You can check its performance or success using several methods.
- Buy low PE ratio stocks
- Buy low price to cash-flow ratio stocks or low price to book ratio stocks
Value Investing from Management Perspective
Calculate the valuation of the company from the Management or business owner’s perspective. It is a very important principle of value investing.
A good management adds value and focuses on growing the business. As a result, it creates long-term capital gains for shareholders. On the other hand, bad management can destroy the fundamental. It will also weaken the financials of the company and making unattractive for an investor.