Besides educating yourself, the best way to find undervalued
investment is to have lots of investing idea. Having investing
idea allows you to compare investment alternatives and pick the
best one.
People sometimes lament that they seldom find stocks that fill
the criteria as undervalued. How can you find a 0% growth stock
at a P/E of 13.4? A lot of companies are trading at a P/E of 20
or more. How can you find companies that have positive net cash?
Lots of companies have more debt than they have cash.
All of the above is true. Most companies do not trade at
undervalued territories. A lot of them also incur a lot of debt
and their balance has a negative net cash balance. And that is
why you will be rewarded when you can find undervalued stocks.
Think about it. If a 0 % growth stock is traded at a P/E of 10
and its fair P/E value is 13.4. This is a 34% potential return.
To get that kind of potential return, investors need to sort out
good companies from the bad and be more selective in buying a
stock. This is where investing idea comes into place. When you
receive plenty of investing idea, you can be more selective in
buying the common stock. So, where can you find investing idea?
One good investing idea source is stocks that fall near its 52
week low. Businessweek screener seems to provide a decent neatly
arranged results. For links, you can visit our commentary
section and read this article. Another good source for investing
idea is by reading financial news from various publications such
as The Motley Fool, CNN, thestreet.com and smartmoney. Stocks
that fall hard are sometimes mentioned here.
Finally, a good source of investing idea is by regularly
visiting our commentary section at:
http://www.noviceinvesting.com. You may not agree with our
assertion but at the very least it will open your mind about
other possibilities and industries. The best thing of all is
that it is free ! You can access useful commentary from various
sources with zero cost. What else can you ask for?
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