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Rich Preach is a compendium of financial awareness. This is an attempt to ignite financial literacy and demystify the tricks of making money. The approach is not a short cut but knowledge driven. The author has tried to keep the vital information crispy and understandable to a common individual.

 
Value stocks?

Investment guru, Benjamin Graham, has talked much about value investing and value stocks in his book “The Intelligent Investor”. Let us simplify the concept so that you do not have to browse entire book.

Value stocks have characteristics like:

- These stocks are available at a bargain (cheap) price, i.e. the stocks are trading at a lower price than their valuations.
- Fundamental financial strength of the company is good.
- P/E is low compared to the sectoral leaders of the stock. But re-rating is possible if there is rise in demand of the stock.
- It has a potential to unlock more values. Unlocking could be of certain nature: land bank, a new product line, a new subsidiary etc.

The ratings of such stocks are very handy these days and available in financial magazines, blogs, newspaper or company websites.

Now you have rather simple task in terms of finding such value stocks. But yes… Don’t fall in love with these stocks. Sell them once the valuations seem stretched. Don’t be greedy. OK?