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Strategies & Market Trends : Value Investing
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To: Paul Senior who wrote (62247)7/27/2019 12:47:23 AM
From: Elroy  Read Replies (1) of 78753
 
"A Value Stock is a stock with a price to book below its comparable group"



I pretty much never look at it in this relative way.


For example, you could take the S&P 500, get the price to book for all 500 stocks, and say that the lowest 20% are "value stocks" relative to the S&P 500.

That may not be a good way to invest, but it is a good definition of value stock.

Similarly, you could take 100 stocks which have a PE of 25, calculate the price to book for all 100, and then take the cheapest 10 P/B ratios and say for stocks with 25x PE, these 10 are the "value picks".

It seems natural for "value" to be a derivative of stuff the company owns, and book value is what captures that.
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