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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Paul Senior who wrote (19893)	10/17/2004 5:03:25 PM
From: Carl Worth	Read Replies (2) \| Respond to of 78666

just to throw in my two cents' worth, when i look for a value stock, i am usually looking for: a stock that trades well below what i consider it to be worth based on its earnings, growth, and book value, and with some kind of consistent or innovative product or business, to help ensure future growth or: a stock trading at or below what i consider to be its current fair value, with consistent earnings growth, a solid balance sheet, some kind of dividend (usually), predictable future growth, an established niche and/or customer base, leadership in its sector, and then optionable so that i can sell puts in the first case i look to accumulate the shares expecting that i will be rewarded in the long run as the price of the stock appreciates to reflect the company's fundamentals as they become better known and continue to improve...this often takes a while to bear fruit, but the returns can be significant once the company finally gets discovered in the second case i watch for the stock to become temporarily oversold in order to sell puts, figuring that the fundamentals will keep the stock from taking any major hits, and capturing the put premium over time...if the stock moves down to where i think it is especially compelling, particularly during a time when the overall market is also well oversold (such as the august decline), i will often sell in-the-money puts in order to also attempt to capture some of the upside of the stock...obviously this increases both the risk and the potential reward of the trade for me stocks like MRK, PFE, MO, etc. would automatically be excluded due to litigation risk, unless they dropped so low that the potential downside was already more than factored in, as in MO when it was around 20 a few years ago...that would be a different category of value, sort of a hybrid of the two above scenarios, where basically "things can't get any worse," though of course we all know for some companies, they still can -G- JMHO, and curious to know what others would view as the most important factors in buying a "value" position