A look into the mind of how a value investor
works through the process will help you to
develop a deeper understanding of what is
involved in this approach to investment.
By following a predefined value investment
guide you will learn how to
identify great opportunities based on the
skill of where to look and on how
to conduct and decipher fundamental analysis. Whilst this may sound like
a technical process, value investors can
follow a defined criteria as they
zone in on an opportunity that conforms to the principles of value
investing.
Sector specific stock screening
process
Objective - Generate sector specific ideas
to conduct fundamental
analysis on 20 companies.
Begin with your
focus on a specific industry sector. For
example, as part
of your diversification strategy you would
like to include a Pharmaceuticals
stock to your portfolio. Using any one of the free stock screeners
(Google
Finance, Yahoo
Finance), filter through to your chosen
sector to begin looking for signs of
attractive valuations.
Identifying attractive valuations will
require you to look into the basic
financial structure of companies. As value
investors we are looking for
cheap valuations in great companies. To
determine this in your chosen
sector, begin by assessing companies under
the following criteria;