The Search for Value

• 1
  Locate low-priced stocks to find bargains.stocks and shares image by Fyerne from Fotolia.com
  
  Go to a computer, log on, and go to a free financial site such as MSN's Investing section. Go to the stock screener and you find that there are two sections: Company Basics and Key Financial Indicators. Leave the settings in place for the Company Basics section and select the following for Key Financial Indicators:
  
  Dividend Yield = As High As Possible
  Price/Earnings Ratio = As Low As Possible
  Average Daily Volume over Last 2 weeks = Any
  Net Profit Margin = As High As Possible
  12-Month Relative Strength = As High As Possible
  Debt/Equity Ratio = As Low As Possible
  Revenue Growth Year vs Year = As High As Possible
  
  Then click the "search" button at the bottom of the page and copy the results into a Word or Notepad document.
  
  
• 2
  Select from strength.strong money image by Witold Krasowski from Fotolia.com
  
  Eliminate any stocks that have a 12 month RS, or relative strength, value that is less than 50. Relative strength is a comparative indicator that measures a stock's performance compared to the rest of the market. Staying with stocks that have a RS of 50 or more filters out underperforming stocks in the market.
  
  
• 3
  Only invest is cheap stocks that are listed on stock exchanges.wall street with flag image by Tomasz Cebo from Fotolia.com
  
  Discard any stock that is OTC, or over the counter, issue. You only want to buy stocks from an exchange like the New York Stock Exchange or Nasdaq because of liquidity. A stock with good liquidity will have enough buyers and sellers to allow a quick entry and exit. OTC stocks lack that attribute.
  
  
• 4
  Determine the market cap for each stock.senior saving. image by bluefern from Fotolia.com
  
  Go down the list of stocks and note the market capitalization for each. The market capitalization, or market cap, is the total number of shares the company has outstanding multiplied by the value of one share. If you input the stock symbol in MSN's ticker look-up on the site's Investing section, it will pull up the stock price and also tell you the market cap.
  
  
• 5
  Subtract liabilities from assets to get the net asset value of the stock's company.business graphs image by Chad McDermott from Fotolia.com
  
  Check the asset value for the stock in the Research section of MSN's Stock section located in the left-hand column. Input the stock's symbol and it will give you the gross assets and liabilities of the company. Subtract the liabilities from the assets and you have the net asset value of the company. Mark that down by the respective stock.
  
  
• 6
  Study a stock carefully to judge its value.Success & Wealth image by wayne ruston from Fotolia.com
  
  Determine if the stock's net asset value is greater than its market cap. If it is, then you have a cheap stock with high value and a strong candidate for investment. If the market cap is higher than the net asset value, then discard it as a potential investment candidate.