Using Value Screening for Value Investing
The stock market strategy of value investing involves a number of techniques that must be mastered in order to be successful.
The question has been posed, however, whether the technique of value screening is still useful for value investors. According to a study done by an investor with the pseudonym UK Value Investor, the technique of value screening still seems to work. The study was conducted with results for 2010. Past results nevertheless are no clear indication of future performance.
Some of the value screens that you can use include using the price to book ratio of stocks. It was found that on average, stocks with a lower price to book ratio tend to achieve better returns. Another useful value screen is the ROE10 which is the return on equity averaged over the last 10 years.
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