FUNDAMENTAL ANALYSIS- VALUE INVESTING STRATEGY
Value investment strategy usually deals with finding companies that trade below their intrinsic value, that is, stocks that market has undervalued. Investors who tend to believe in this strategy claim that markets react to good and bad news which thereby leads to fluctuations in the prices, not correlating with long term fundamentals of a company. When price starts to fall for a temporary period, investors find this opportunity to make profits, assuming that fallacy will be corrected in valuation by the market.
Investors find stocks on any stock exchange platforms, however, value investors can include the following in their strategies and should find companies with:
MARGIN OF SAFETY
It can be said that value investing succeeds only when an intrinsic value calculated is exact. Investors can find this value by themselves or by any online source but they are advised to give a margin of safety such as if you have very well calculated the intrinsic value of a company to be Rs.30 per share, then you may use Rs.25 in your analysis. A margin of safety helps you avoid paying more for a stock even when the intrinsic value of a stock is less than you computed.