Very popular method of fundamental analysis. It consists of finding a company whose price-earnings (P/E) ratio is low compared to others of its kind. To find the price-earnings ratio, divide the stock’s current price by its earnings per share. Fundamental Analysis is the art of evaluating the intrinsic value of a stock to find long-term investing opportunities. Fundamental analysis relies on several tools to give investors an accurate picture of the financial health of a company and how the market values the stock.
Warren Buffett and Benjamin Graham come to mind. These legendary investors are proponents of “value investing” and there is no fundamental analysis metric more associated with value than the Price to Book Ratio. Warren Buffett’s investment approach to beat the market. that’s where my Buffett-based Guru Strategy comes in. It looks at a myriad of figures on a company’s balance sheet and in its fundamentals to find only the most attractive stocks of solid companies.