Value Investing

The basic concept is straightforward: If you know the true value of something, you can save a lot of money when you buy it on sale. Whether you buy a new Mobile on sale, or at Full price, you’re getting the same Mobile with all the features

Stocks work in a similar manner, meaning the company’s stock price can change even when the company’s value or valuation has remained the same.

Value investing is an investment strategy that involves picking stocks that appear to be trading for less than their intrinsic or book value.
Value investors actively ferret out stocks they think the stock market is underestimating.
Value investors use financial analysis, don’t follow the herd, and are long-term investors of quality companies.

Characteristics of great value stock

Well-established businesses with long histories of success
Consistent profitability
Stable revenue streams
Dividend payments

You should research on the company by research and checking its financial metrics

Reading the Financial Statements
Finding out what it does
Understanding the industry – is it cheap because it is in a declining industry?
Identifying the potential challenges the company might be facing
Keeping current with news about the company

Financial Metrics

Price-to-Earnings Ratio
Compare the P/E ratio with industry peer
Price-to-Book Ratio
Find a stock with a P/B ratio that is less than 1. This means that it is currently priced cheaper than its equity or book value.
Price-to-Earnings Growth (PEG) ( P/E ratio / Earnings Per Share Growth)
PEG looks more into future growth compared to P/E ratio which is based on historical figures.
Net-Net Value ( Current Assets – Total Liabilities )
If the current assets can cover all of the company’s liabilities, the net-net value will be positive and that will be an investment worth looking at
Debt-to-Equity Ratio
A company with a low debt-to-equity ratio is better for investment
Price-to-Free Cash Flow
Cash is the most liquid current asset the company can have.
Price-to-FCF Ratio = Price / Free cash flow per share
Lower numbers indicate that a company is under priced.