GUIDE

Value Investing Basics

Value investing focuses on buying strong businesses at prices below a reasonable estimate of their worth.

Price vs. Value

A stock's price changes daily, but its underlying business value changes more slowly. Value investors look for a gap between price and value.

Margin of Safety

Buying with a margin of safety means paying a price that leaves room for mistakes in your assumptions. The larger the discount to value, the more protection you have.

Business Quality

Great value ideas often start with durable businesses: consistent demand, strong brands, or cost advantages. Quality helps a company keep earning power through market cycles.

Financial Strength

Look for healthy balance sheets, steady cash flow, and manageable debt. Financial resilience reduces downside risk when markets get volatile.

Valuation Signals

• P/E Ratio: Compare earnings to price for a quick value check.
• Cash to Debt Ratio: Measures financial flexibility and balance sheet strength.
• 52-Week Range: Shows how today's price compares to the past year.

Putting It Together

Use screeners to find candidates, then review the financials to confirm quality, stability, and value.