Lux Investing
explain what value investing is please?
what is value investing
Public Comments
- stock is just a paper.It's no value.
- stocks can broadly be classified into two groups--growth stocks and value stocks. Value investing is investing in stocks or perhaps other assets that are considered to be selling below what they should be selling for. Of course what the should be selling for is a matter of divided opinion. Value indicators as they relate to stocks include price/book, price/sales, price/earnings, dividend rate, and PEG ratio (price/earnings/expected growth rate), debt/equity, and many more besides. They lower all of these indicators other than dividend rate the more of a perceived value a stock is. A higher dividend rate is an indicator of a better value stock. Here are a couple of examples to illustrate the point of a value stock vs a growth stock. ACAS: price/book = 1.12 (Recently it was below 1.00 price/sales = 5.80 (actually high relative to other companies) price/earnings = 9.56 relatively low about 2/3 the average dividend rate = 11% extremely high PEG ratio = 1.4 about average debt/equity = 0.749 not great but not bad either. Now for a stock that by no figment of the imagination could be considered a value investment FSLR: price/book = 15.8 price/sales = 34.4 price/earnings = 107 dividend rate = 0 PEG ratio = 1.62 perhaps this is why the stock is selling at such a high ratio to the other indicators debt/equity = 0.099
