How do I find undervalued stocks?
Find undervalued stocks by comparing intrinsic value to market price, looking for positive margin of safety, and confirming with quality metrics like ROE and debt levels.
To find undervalued stocks systematically:
1. **Calculate Intrinsic Value** - Use DCF, Graham Number, or multi-method approaches 2. **Check Margin of Safety** - Look for stocks where intrinsic value exceeds market price by 20%+ 3. **Verify Quality** - High ROE (>15%), low debt (D/E < 1), consistent earnings 4. **Use a Stock Screener** - Filter by P/E < 15, P/B < 1.5, margin of safety > 20% 5. **Cross-check with Analysts** - Compare your valuation to analyst targets
Key metrics for finding undervalued stocks: • Margin of Safety > 20% • P/E Ratio < Industry Average • PEG Ratio < 1 • Price/Book < 1.5 • Quality Score > 60
Intrinsic Investor's screener lets you filter by all these metrics and shows margin of safety for every stock.
Source: Intrinsic Investor (https://www.intrinsic-investor.com)
This answer is for educational purposes only, not investment advice.