Due Diligence in Value Investing
When scouring the web for value investing ideas, utilizing various stock-screeners can be a good place to start. Screeners allow you to plug in a set of criteria and then filter the market for those stocks that match all the parameters you set. Screening will give you a list to start with, but it is up to the investor to follow up on each stock with due diligence to get the full picture.
As a value investor you are looking for stocks with deep value that have the potential to increase over time, not necessarily overnight. This usually requires more research, but the pay-off can be worth it. Given the longer-term horizon of value investing, some excellent screening criteria to begin your research with would be: 5 years of revenue and EPS growth historically and forecast into the future, low price to book under one, and long term debt to equity under one.
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