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value stocks Archives

What are Value Stocks?

Notice any stocks that are getting pummeled as a result of embarrassing headlines or negative rumors? They might be the next great value stocks.

Investing in value stocks isn’t quite as simple as that. But that’s sort of the mentality. “Be greedy when others are fearful,” legendary value investor Warren Buffett once said. His advice still rings true.

Sometimes good companies get wrongly punished by the stock market, often to the point where they become undervalued. But not just any company receiving a bit of bad news qualifies as a good value play. Instead, value stocks typically share a couple of key characteristics.

Those are:

  • Strong growth prospects. Every stock takes it on the chin at one point or another. The companies whose sales and earnings grow through it are the ones that consistently bounce back. It doesn’t take much for a stock to get knocked down—a disappointing new product, a scandal involving one of its executives, a bad Super Bowl ad. Those are temporary problems. For savvy value investors, they’re also prime buying opportunities.
  • Cheap multiples. There are ways to actually measure value stocks. And it’s not as simple as looking at the price to earnings (P/E) ratio, as some analysts might have you believe. Price to earnings is just one of six valuation benchmarks we use. The others are price to book value, price to cash flow, price to dividends, price to sales, and the PEG ratio, which is calculated by dividing the current stock price by the last four quarters of earnings per share growth. For a company to be considered a strong value stock candidate, at least one of those ratios needs to be low. If several of those valuation multiples are low, and earnings are projected to grow, then you may have found a stock that is trading well below its intrinsic value.

Even with those characteristics in place, successful value investing still depends a lot on timing. You don’t want to invest in a strong value candidate while it’s still in free fall. You want to buy value stocks right around the time they’ve hit rock bottom—or at least close to it.

To learn more and discover how you can find the right stocks for your portfolio, download our free report, How to Find Undervalued Stocks – Plus the Benjamin Graham Approach to Value Stocks, right now.

 

 

 

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Cabot Early Opportunities Special Bulletin

March 2, 2021|From Cabot Early Opportunities|by Tyler Laundon|Small Cap Stocks

C3.ai (AI) reported Q4 results yesterday – its first as a public company – that came in ahead of expectations but didn’t offer enough about future growth to support the stock’s valuation. Revenue in the quarter was up 19% to $49.1 million while subscription jumped...
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Cabot Profit Booster 164

From the Cabot Profit Booster 164 issue of Cabot Profit Booster|by Jacob Mintz|Options Trading

Fears of rising inflation, and what that would mean for interest rates, weighed on the market last week, especially growth stocks, which were crushed.
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The 4 Value Stocks Charlie Munger Loves Most

The 4 Value Stocks Charlie Munger Loves Most

From the issue of |by Bruce Kaser|Value Investing

Charlie Munger has been behind many of Warren Buffett's biggest successes. So when he says these are his 4 favorite stocks, it's worth noting.
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Cabot Stock of the Week 337

From the Cabot Stock of the Week 337 issue of Cabot Stock of the Week|by Timothy Lutts|Stock Market

While some segments of the broad market have experienced a sharp correction over the past month (growth stocks in particular), the broad market has not fallen apart; in fact, many indexes hit new highs just last week. And, of course, today’s big jump rather...
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Cabot Early Opportunities Special Bulletin

February 26, 2021|From Cabot Early Opportunities|by Tyler Laundon|Small Cap Stocks

Arcosa (ACA) released an uninspiring report on Wednesday that was particularly ill-timed given yesterday’s market retreat. The company missed across the board. Revenue was up 2.7% to $459 million, missing by $4.7 million while adjusted EPS of $0.33 missed by $0.08. Guidance for 2021 missed...
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Cabot Prime Week Ending February 26, 2021

From the Cabot Prime Week Ending February 26, 2021 issue of Cabot Prime|by Cabot Wealth Network|Cabot Prime

Stock Recommendation Tracker The Stock Recommendation Tracker is a table that features all of the current recommendations in all of our portfolios. It’s a quick way for you to see what stocks are currently in our portfolios and will highlight new additions or any to...
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Cabot Prime Pro Week Ending February 26, 2021

From the Cabot Prime Pro Week Ending February 26, 2021 issue of Cabot Prime Pro|by Cabot Wealth Network|Cabot Prime Pro

Stock Recommendation Tracker The Stock Recommendation Tracker is a table that features all of the current recommendations in all of our portfolios. It’s a quick way for you to see what stocks are currently in our portfolios and will highlight new additions or any to...
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Cabot Growth Investor 1466

From the Cabot Growth Investor 1466 issue of Cabot Growth Investor|by Mike Cintolo|Growth Stocks

More Cracks Appear At the start of November we saw a couple of blastoff-type indicators flash green (like the Three Day Thrust rule), and that turned out to be the start of a powerful intermediate-term advance. During the next two-plus months, progress was relative there...
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Cabot Small-Cap Confidential Weekly Update

February 25, 2021|From Cabot Small-Cap Confidential|by Tyler Laundon|Small Cap Stocks

The big picture for the market is that the uptrend is intact but under the surface we’re continuing to see pockets of turbulence. While the S&P 500 is just 2% off its high from last week and the S&P 600 Small Cap Index a..
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Cabot Global Stocks Explorer Bi-weekly Update

February 25, 2021|From Cabot Global Stocks Explorer|by Carl Delfeld|Emerging Markets

You may have seen that a relatively new Explorer idea, Fisker (FSR), was up 38% yesterday. It turns out that my analogy of comparing the company to Apple’s relationship to Foxconn was truer than even I could imagine. The news yesterday was that Foxconn will be a..
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Cabot Dividend Investor Weekly Update

From the issue of |by Tom Hutchinson|Dividend Stocks

Earnings have been sensational. Reported earnings for S&P 500 companies have grown an average of 2% in the fourth quarter, compared to an expected -11%.
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Cabot Marijuana Investor 221

From the Cabot Marijuana Investor 221 issue of Cabot Marijuana Investor|by Timothy Lutts|Stock Market

“Legal Weed Stocks Dip Despite New Jersey Governor Signing Recreational Cannabis Bill Into Law” That was the headline on one of my news sources yesterday morning, implying that the action of the stocks in light of that legalization event was somehow illogical. But as know...
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Cabot Early Opportunities Special Bulletin

February 24, 2021|From Cabot Early Opportunities|by Tyler Laundon|Small Cap Stocks

Upwork (UPWK) reported Q4 results yesterday that surpassed expectations on the top and bottom lines. Revenue was up 32% to $106.2 million (beating by $8.8 million) while adjusted EPS of $0.06 beat by $0.06. Guidance for 2021 also surpassed consensus.
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Cabot Income Advisor 221

From the Cabot Income Advisor 221 issue of Cabot Income Advisor|by Tom Hutchinson|Income Investing

Open-Up Stocks Thrive While the Market Struggles It’s been a rare down week in the market. But there’s nothing to be alarmed about. The S&P 500 is only down a little so far. And the uptrend that has existed for almost a year is intact. Even...
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Cabot Undervalued Stocks Advisor Weekly Update

February 24, 2021|From Cabot Undervalued Stocks Advisor|by Bruce Kaser|Value Investing

The stock market is clearly accelerating the “reopening” trade. Small cap and cyclical stocks as well as commodity prices are surging, interest rates continue to tick up (the 10-year Treasury yield is now 1.38%, up from 0.92% at year-end), and novel financial vehicles SPACs,...
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Cabot Micro-Cap Insider Update

February 24, 2021|From Cabot Micro-Cap Insider|by Rich Howe|Small Cap Stocks

Judging by some headlines and my Twitter feed, you would think the markets are in meltdown mode. But I just checked and the S&P 500 is only 1.9% down from its all-time high. And the Russell Micro-Cap Index is down 4.0% from its high...
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Cabot Turnaround Letter 321

From the Cabot Turnaround Letter 321 issue of Cabot Turnaround Letter|by Bruce Kaser|Value Investing

We are modestly optimistic on energy prices – domestic production will likely remain subdued while global demand has essentially returned to pre-pandemic levels even though some petroleum-driven demand for gasoline and jet fuel hasn’t fully recovered yet.
Read More

Cabot Early Opportunities Special Bulletin

February 23, 2021|From Cabot Early Opportunities|by Tyler Laundon|Small Cap Stocks

Last week wasn’t great for growth stocks and so far, this week is just plain awful. The primary culprits are known; risk of inflation and higher interest rates have pushed cyclical stocks up and growth stocks down (generally speaking).
Read More

Cabot Profit Booster 163

From the Cabot Profit Booster 163 issue of Cabot Profit Booster|by Jacob Mintz|Options Trading

The stock market added to its gains last week up for a second straight week with the S&P 500 up 1.2% while the Nasdaq jumped 1.7%. Of note, February expiration is upon us this week. And all three of our February positions (Alcoa, and...
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Cabot Undervalued Stocks Advisor Special Bulletin

February 23, 2021|From Cabot Undervalued Stocks Advisor|by Bruce Kaser|Value Investing

With the shares continuing to surge past our recently raised 65 price target, and now being priced at a premium to even our upgraded valuation metrics
Read More

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