Value investing is most concerned with the underlying fundamentals of a company’s business rather than short term fluctuations in its stock price. Value investing is an investment philosophy that aims to invest in sound companies that are undervalued by the stock market. Some value investing indicators are listed below
• Quality Rating – a company’s quality rating should be at least ‘average’. Value investors’ philosophy is not necessarily to buy the best quality companies: anything at average or better is regarded as a suitable target.
• Debt to Current Asset Ratio – value investors always favour companies with a low debt load; that is, those that have a total debt/asset ratio of less than 1.10.
• Positive Earnings Per Share – find companies that have had positive earnings per share in the last 5 year period and that have had no earnings deficits.