Education The Best InvestmentEducation The Best Investment. E-book. Formato EPUB - 9791222467443

A stock can be undervalued for many years in a row. The reason could be lingering concerns about the company (or lack of investor confidence), or it could be because the stock is not attractive enough to an investor. However, as value investors, our goal is to buy stocks that are both undervalued and have good profit growth prospects. If you are certain that the stock's earnings growth rate is greater than its P/E ratio, then you should at least profit from that earnings growth even if the stock remains undervalued.
In general, when we talk about value, we are talking about value to profits. In Chapter 9 we discuss value stocks with strong balance sheets (they are of interest to fundamental investors), but strong balance sheets are not an important goal. main focus of value investors. The main characteristic of a value stock is that its market price is lower than its actual value when compared to the past earnings growth rate and the forecast growth rate.