Most value investors already know that when it comes to a company’s health, the fundamentals are king. Fundamentals, which include a company’s financial and operational data, are preferred by some of the most successful investors in history, including the likes of Warren Buffet.
This is because knowing the ins and outs of a company’s financial numbers – such as earnings per share (EPS) and sales growth – can help a discerning investor zoom in on stocks that are trading for less than they’re worth.
Also, when it comes to value investing, going against conventional wisdom may just be your best bet to increasing investment performance.
While there isn’t a “surefire” way to analyse a stock, any successful investor will tell you that the key to winning is by focusing on certain fundamental metrics. Clearly, some metrics deserve more attention than others and here are 5 important ones that you’ll need to look at if you’re serious about building your value portfolio.
Infographic by Fiona Ho.