INVESTING STRATEGIES - VALUE INVESTING

Value Investing.


• Value investing is about identifying shares that are worth more than their
current Price.

• Look for value sectors e.g. cyclicals, for expanding margins and for value in
emerging industries e.g. tech, biotech, wireless.


General Criteria:

• A low but rising PE combined with growth in profits and sales. Measure against
the industry and the share's PE range over the last 5 years. Compare the
industry average with its historical range - the industry may be out of
favour. Compare with the appropriate Index.

• PBV<1. Compare with historical averages, industry and Index averages.

• Low PSR. Compare historically and with industry.

• Low PCF. Free Cash Flow is Cash Flow less required Capital Spending, Interest,
Dividends, and Working Capital needs.

• Good and increasing ROE.

• Good EPS compared to shares in similar industries.

• Smallholdings by major institutions.

• Low debt.

• Special features relating to competitive advantage franchises and brands.

• Rising Dividends with good Dividend Cover. A good Dividend Yield creates a
floor for the share Price. As Dividends rise investors will buy the share for
income.

• Medium-sized companies.

• Watch out for ‘creative’ accounting.

• Consider the stock if:

Management change
Management is open about the problems
Problem with only one division or product
Sale of assets e.g. non-productive divisions.