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BY DR. DAVID EDWARD MARCINKO; MBA MEd CMP™
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SPONSOR: http://www.MarcinkoAssociates.com
Value Stocks – Looking for Bargains!
The bargain-hunting value style is looking for shares that are under priced in relation to the company’s future potential. A physician value investor will invest in a company in the expectation that its shares will increase in value over time. Value investing is based essentially on quantitative criteria; asset values, cash flow, and discounted future earnings. The key properties of value shares are low Price/Earnings, Price/Sales ratios, and normally higher dividend yields.
On observing a company’s earnings growth, a value manager will decide whether to buy shares based on the company’s consistency or recovery prospects.
The key research questions are: 1) Does the current P/E ratio warrant an investment in a slow growth company or, 2) Is the company a higher growth candidate that has dropped in price due to a temporary problem. If this is the case, will the company’s earnings growth recover, and if so, when? The key to value investing is to find bargain shares (priced low historically or for temporary and/or irrational reasons), avoiding shares that are merely cheap (priced low because the company is failing).
The buying opportunity is identified when a company undergoing some immediate problems is perceived to have good chances of recovery in the medium to long term. If there is a loss in market confidence in the company, the share price may fall, and the value investor can step in. Once the share price has achieved a suitable value, reflecting the predicted turnaround in company performance, the shareholding is sold, realizing a capital gain.
And, a potential risk in value investing is that the company may not turn around, in which case the share price may stay static or fall.
SPEAKING: Dr. Marcinko will be speaking and lecturing, signing and opining, teaching and preaching, storming and performing at many locations throughout the USA this year! His tour of witty and serious pontifications may be scheduled on a planned or ad-hoc basis; for public or private meetings and gatherings; formally, informally, or over lunch or dinner. All medical societies, financial advisory firms or Broker-Dealers are encouraged to submit a RFP for speaking engagements: MarcinkoAdvisors@outlook.com
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Filed under: "Ask-an-Advisor", Experts Invited, Financial Planning, Glossary Terms, Investing | Tagged: bargain stocks, bargain value stocks, finance, Investing, Marcinko, physicians value investing, stock market, stocks, value investing | Leave a comment »
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