Part 9 Fundamental Analysis – How to Analyze Shares Using Data (Value Screening)

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Contents

Fundamental analysis

A set of articles dealing with fundamental analysis. Fundamental analysis is an efficient tool useful especially when trading shares. Nevertheless, you can use it also as a trader of commodities and currency pairs. We strongly recommend learning at least the basics of fundamental analysis – even a very experienced technical trader may be surprised by news releases and unusual price movements.

Personally I think that it’s interesting to watch charts of bitcoin and gold when it comes to news trading.

On our website, there is a section titled “NEWS”. This section contains articles that may inspire you for some interesting deals. Mostly by trading company shares as CFD. Both binary options and forex are good for trading using fundaments. Good luck in trading!

Articles about Fundamental analysis

Part 9: Fundamental Analysis – How to Analyze Shares Using Data (Value Screening)

In this article, we will take a look at how to use the data you can find in the Finviz platform, specifically, how to use it in real trading or…

Technical or fundamental analysis: Which one should you choose?

There are loads of strategies for the trading binary options, forex or cryptocurrencies that can be grouped into two categories: fundamental a technical. Which of them is more efficient? Is…

Part 8: Fundamental Analysis – The “January Effect” – An opportunity or a myth?

Have you ever heard of the January effect? January is said to be a month in which you can make profit most easily. Read the following article to learn how…

Part 7: Fundamental Analysis – Trading Cryptocurrencies

Does it make sense to use fundamental analysis for trading cryptocurrencies? Is such an analysis reliable enough? Sure, it is. Otherwise, we wouldn’t spend so much time on it in…

Part 6: Fundamental Analysis – Trading news releases! (Trading Pattern)

In this article I’ll show you how easy it is sometimes to trade using the fundamental analysis, but only if it is properly combined with technical analysis. I got the…

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Part 5: Fundamental Analysis – eXbino Market Review

Most traders registered with an eXbino broker (review in polish language) receive emails with a daily market review. Those emails give you three tips on which assets to trade that day, in…

Part 4: Fundamental Analysis – 4 Steps to trade news releases

Trading news forms the basis of fundamental analysis. This video was prepared by Binary Blue Sky coaches, for an OptionTrade webinar. However, OptionTrade has disappeared from the market – they…

Part 3: Fundamental Analysis – Announcement of NFP news

It has surely happened to you that price suddenly started to move like crazy. “Why is this happening?” many of you might have asked. One of the many possible reasons might…

Part 2: Fundamental Analysis – The basics (Video)

Today, you can watch video that I found on youtube. Although it’s generally used for Forex traders, it can also help understanding how we can trade binary options using fundamental news….

Part 1: Fundamental Analysis – Introduction

Today we would like to start a new set of articles that will cover fundamental analysis and the use of global news that work in our favor. Fundamental analysis is…

Learning academy

Part 35: Technical analysis – What is volatility

Volatility. A term very often used in Internet discussions, but also in books on trading and in trading courses. But what exactly is volatility? You’ll find out in this article….

Part 9: Fundamental Analysis – How to Analyze Shares Using Data (Value Screening)

In this article, we will take a look at how to use the data you can find in the Finviz platform, specifically, how to use it in real trading or…

Trailing stop loss — Helps automate your deals

When it comes to trading using the IQ Option broker (read review here), it pays to use all available tools and resources. One important feature that should get your attention…

Maximize the use of indicators in day trading

The efficiency of one’s trades depends on the use of varied technical analysis indicators. And the good news is that broker IQ Option offers its users a variety of tools…

Part 34: Technical Analysis – Head and Shoulders Price Formation

In today’s Technical Analysis Series, we shall take a look at the Head and Shoulders price formation (Head and Shoulders – H&S). It is a very specific scheme capable of…

Guide: How to register with the eToro broker (step by step)

Have you ever seen a green logo in the shape of a bull’s head? If so, it is very likely that it’s been the logo of the eToro broker, a…

IQ Option – How to deposit and withdraw with WebMoney

WebMoney is a popular e-wallet that can be used when depositing and withdrawing funds at IQ Option trading platform. This is also used as a popular online payment option for…

Market analysis with IQ Option – How to do it?

As you know the movement of asset prices can be influenced by many factors. Some of the most common factors that can influence the price are micro and macroeconomic reports,…

Responsibility delegation does not always have to be up to you

You may hear people saying that trading is just about you, your trading strategy, your orders, and your money. For the most part, they would be right, especially when it…

Forex Money Management: When and how to use hedging

Hedging is a trading tool (or a strategy) widely used by large corporations, funds, but also by retail traders like yourself. How to use forex hedging in the form of…

Benjamin Graham’s Seven Criteria for Picking Value Stocks

Benjamin Graham’s seven time-tested criteria to identify strong value stocks

Value investing, perhaps more than any other type of investing, is more concerned with the fundamentals of a company’s business than its stock price or market factors affecting its price. One of the earliest proponents of this fundamentals-based value investing strategy was Benjamin Graham in the 1920s.

The details of this value strategy are spelled out clearly in his book, “The Intelligent Investor,” published 70 years ago. The objective of Graham’s strategy is to identify unappreciated stocks and show you how to find undervalued stocks that meet certain criteria for quality and quantity … stocks that are poised for stellar price appreciation.

How to Find Undervalued Stocks

A growing number of undervalued stocks are available for the conservative, steady investor to snap up and hold for long-term gain. It’s an exciting time to be a long-term, value investor! And we have a FREE Special Report, How to Find Undervalued Stocks, to help you get started.

Benjamin Graham Value Stock Criteria List:

Value Criteria #1: Quality Rating

Look for a quality rating that is average or better. You don’t need to find the best quality companies–average or better is fine. Benjamin Graham recommended using Standard & Poor’s rating system and required companies to have an S&P Earnings and Dividend Rating of B or better. The S&P rating system ranges from D to A+. Stick to stocks with ratings of B+ or better, just to be on the safe side.

Value Criteria #2: Debt to Current Asset Ratio

Benjamin Graham advised buying companies with Total Debt to Current Asset ratios of less than 1.10. In value investing it is important at all times to invest in companies with a low debt load. Total Debt to Current Asset ratios can be found in data supplied by Standard & Poor’s, Value Line, and many other services.

Value Criteria #3: Current Ratio

Check the Current Ratio (current assets divided by current liabilities) to find companies with ratios over 1.50. This is a common ratio provided by many investment services.

Value Criteria #4: Positive earnings per share growth

Criteria four is simple: Find companies with positive earnings per share growth during the past five years with no earnings deficits. Earnings need to be higher in the most recent year than five years ago. Avoiding companies with earnings deficits during the past five years will help you stay clear of high-risk companies.

Value Criteria #5: Price to earnings per share (P/E) ratio

Invest in companies with price to earnings per share (P/E) ratios of 9.0 or less. Look for companies that are selling at bargain prices. Finding companies with low P/Es usually eliminates high growth companies, which should be evaluated using growth investing techniques.

Value Criteria #6: Price to book value (P/BV)

Find companies with price to book value (P/BV) ratios less than 1.20. P/E ratios, mentioned in rule 5, can sometimes be misleading. P/BV ratios are calculated by dividing the current price by the most recent book value per share for a company. Book value provides a good indication of the underlying value of a company. Investing in stocks selling near or below their book value makes sense.

Value Criteria #7: Dividends

Invest in companies that are currently paying dividends. Investing in undervalued companies requires waiting for other investors to discover the bargains you have already found. Sometimes your wait period will be long and tedious, but if the company pays a decent dividend, you can sit back and collect dividends while you wait patiently for your stock to go from undervalued to overvalued.

One last thought. We like to find out why a stock is selling at a bargain price. Is the company competing in an industry that is dying? Is the company suffering from a setback caused by an unforeseen problem? The most important question, though, is whether the company’s problem is short-term or long-term and whether management is aware of the problem and taking action to correct it. You can put your business acumen to work to determine if management has an adequate plan to solve the company’s current problems.

Follow these seven value investing principles, and you’ll invest like Benjamin Graham. With luck, perhaps you’ll have the same kind of success he enjoyed!

How have you used Benjamin Graham’s criteria to pick stocks and succeed? We’d love to hear your stories in the comments below.

Find the Best Stocks to Buy!

Timothy Lutts heads one of America’s most respected independent investment advisory services. Each week, Tim personally picks the single best stock in his exclusive Cabot Stock of the Week advisory. Build your wealth and reduce your risk with the top stock each week for current market conditions

*This post was originally published in 2020 and is periodically updated.

How to Find Undervalued Stocks

A growing number of undervalued stocks are available for the conservative, steady investor to snap up and hold for long-term gain. It’s an exciting time to be a long-term, value investor! And we have a FREE Special Report, How to Find Undervalued Stocks, to help you get started.

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    2nd place! Good choice!

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