Finding the Best Cheap Stocks to Buy Now - Value Stocks
Value stocks really are cheap stocks to buy now. Indeed, value stocks are what made Warren Buffett worth nearly $60 billion today.
When a professional investor says a stock is cheap, he or she isn’t talking about the nominal or face value. A $1,000 stock could be one of the best cheap stocks to buy now if the company’s intrinsic value is under-appreciated — and eventually makes it go up to $2,000. By the same token, a $10 stock is expensive if its intrinsic value is over-estimated — and shares eventually collapse to $2.
Value stocks are often stocks that have fallen out of favor with the market. For whatever reason, the bulk of market participants think there’s not much growth or upside ahead, so these securities tend to trade at low valuations — like a low price-to-earnings multiple (P/E) or low price-to-book (P/B).
Eventually, however, true value stocks prove the market wrong. It turns out that, hey, the intrinsic value of the company was mispriced — and the value stock goes up accordingly. The rub? True value stocks aren’t that easy to find. (Most of the time, cheap stocks to buy now are cheap for a reason.) Some value stocks InvestorPlace is bullish on include Avis (CAR) and Siemens (SI).
Be forewarned that even when you do find value stocks that are a few of the best cheap stocks to buy now, it often takes years — or decades — for the market to prove you right. After all, 20 years ago Warren Buffett was worth “only” $8 billion.