Value Investing Strategies
3 strategies available
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Simple Value Multiples
Simple
Screens for undervalued stocks using Price-to-Earnings (P/E) and Enterprise Value to EBITDA (EV/EBITDA) ratios compared to sector peers, with a margin-of-safety buffer.
This strategy identifies potentially undervalued stocks by comparing their valuation ratios to industry peers and historical averages. It screens for stocks with low P/E ratios (price relative to earnings) and low EV/EBITDA ratios (enterprise value relative to operating cash flow). …
Best for: Patient investors seeking steady, long-term returns who can tolerate periods of underperformance. Works best in markets where value stocks are out of favor and due …
Techniques Used
Valuation multiples
Peer comparison
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Fair Value Regression
Moderate
Uses statistical regression to estimate fair value based on company fundamentals, then applies balance sheet health filters to avoid risky investments.
This strategy builds a statistical model to predict what a stock's fair valuation multiple should be based on its fundamental characteristics. It uses regression analysis to find the relationship between factors like growth rates, profit margins, and leverage, and valuation …
Best for: Quantitatively-minded investors comfortable with statistical models who want a more systematic approach to value investing than simple multiple screens.
Techniques Used
Cross-sectional regression
Risk filters
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DCF with Monte Carlo Simulation
Advanced
Calculates intrinsic stock value using Discounted Cash Flow analysis with thousands of random simulations to generate probability distributions of fair value, plus machine learning to detect value traps.
This strategy calculates a stock's intrinsic value by projecting future free cash flows and discounting them back to present value (DCF analysis). Instead of using single-point estimates, it runs thousands of Monte Carlo simulations with varying assumptions for growth rates, …
Best for: Sophisticated investors with financial modeling experience who want rigorous, probabilistic valuation analysis. Ideal for concentrated portfolios where deep analysis justifies the effort.
Techniques Used
DCF (Discounted Cash Flow)
Monte Carlo simulation
Isolation Forest (anomaly detection)