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how can the value investor stocks make you money

finding value investor stocks in other waysThere are many reasons why smaller companies can actually be more efficient than bigger companies. Many times people say that bigger companies can’t be beat becasue large cap companies were the only type of company that survived the last depression which isn't true. For people who have been paying attention to our current economy, we have seen that many large companies are either getting bailed out, and some even went broke or are going broke. Some smaller businesses are is actually doing better in certain industries like the banking industry because they are more able to handle their business with pure efficiency and bootstrapping. Many of you are probably asking why and how are some of these smaller value investor stocks, banks, and business more efficient?

Many of the largest companies in the U.S. and the world for that matter die because their methods of business become old and outdated. It’s hard to teach the new dog old tricks as they say, and you can see that with the American car companies whom many believe that their methods of business are old and outdated. Unfortunately when a business is large, they can’t easily change their methodologies that they have always used in the past. Small cap companies however can change their methods of business more easily to what is happening currently in the world and the economy. Smaller companies can also cut expenses and bootstrap any business that they have, whereas large companies continue to waste and funnel money out on bad projects and debt. How then can we find small cap companies with a stock screener, that are being efficient and smart with money and treating their owners i.e. the stockholders fairly? value investors - why you should invest now

value investor stocks - investing in stocks that are smart

Any efficient company should have a lot of CASH on hand compared to immediate debts that require cash as this is common sense. They also should have little or no debt because debt kills companies in the long run. A company that is efficient should also be investing its money wisely, because if it is getting low
returns from what it invests you can’t expect it too succeed for very long can you? Value investor stocks mean we should be investing like we are buying a business, we want to be getting a good deal, so the company should have a reasonable price compares to its fundamentals. Think about it would you buy a business that took you more than 10 years to get full equity in the business if its net income stayed the same? The last criteria should include the companies’ ability to pay a dividend to you the owner which in this case is you. If a company can’t even pay a little dividend it shows that they are weak and unable to use money for anything more than staying ALIVE right? I will tell you my screening criteria which I try keep as simple as possible even for beginner investors or people not that familiar with investing and value investor stocks. plans short and long term
  • The company should have a market capital bellow one billion, because if it is larger than one billion it is no longer a small cap stock anymore.
  • The company should have no more than 0.5 debt to equity ratio and preferably it should be even LOWER than that because you want to be buying assets, not debt, when you buy a company.
  • The company should have a quick ratio above 1.5 and preferably more. The quick ratio is the same as the current ratio except the current ratio includes inventory which shouldn’t be accounted for as much as cash and cash debts.
  • The company must have a price that is low or depressed from a falling market or speculators and traders pushing the price down to unreasonable levels compared to it's fundamentals.
  • The company must pay something as a dividend in value investor stocks

It is important however that you still diversify even if you do decide to buy companies that have these fundamentals. Small cap stocks that I have noticed that ALREADY have a lot of these fundamentals are listed bellow for your convenience. REMEMBER the price of a company has nothing to do with that it is actually worth in value investing.

  • BKE –Has beat the market with better earnings than expected even in our bad economy, has a good return on invested capital and a low amount of debt, it has a reasonable cash plus it pays a dividend to shareholders.
  • HIMX-Seems to be efficient with a depressed stock price thanks to the American economy, pays a nice dividend, has a low amount of debt for its size with a good return on invested capital.
  • AKS-Has a low amount of debt for it’s size and compared to its competitors, has a reasonable return on invested capital and it pays a dividend with a good amount of cash on hand for the stockholders. It is also selling a primary product necessary for production in all parts of the world besides the U.S. market.