There are some inherent traits that make strong fundamental stocks stand tall even in tough weather.
In business, fundamentals represent the primary characteristics necessary to determine the stability and health of an asset.
Information relating to the profitability, revenue, liabilities, assets, and growth potential of a company form the basis of fundamental analysis.
Commonly, debt free companies or companies with little debt and sufficient cash are considered to have strong fundamentals.
Capital in business is synonymous with fuel for an engine. A company capable of generating its own capital via strong cash flows is less likely to collapse during an economic slowdown or recession.
Apart from capital structure, analysing financial and operating ratios combined with industry outlook can be a good way to filter out fundamentally strong stocks.
Have you ever wondered if there was a stock screener that lets you find fundamentally strong stocks quickly and easily?
We've got you covered. Equitymaster's powerful stock screener screens stocks based on fundamentals, valuations along with other themes.
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As per Equitymaster's Stock Screener, here is a list of the top value stocks in India right now...
These companies have been ranked as per their PE (Price to Earnings) ratio. High PE stocks are considered to be overvalued stocks. And low PE stocks are said to be undervalued.
Generally, speaking, the top value stocks trade at a lower PE ratio as compared to their peers.
Of course, there are other parameters you should take into account before forming a hard opinion on the stock valuation.
The best long-term stocks are those that compound wealth that could last you for generations.
For this, you need to buy great companies at a reasonable price and hold on to them 'forever'.
Asian Paints is a classic example that embodies the true spirit of a 'Forever Stock'. Had anyone invested Rs 500 in the company when it went public in 1982, the value of the holding would be as much as Rs 10 m today.
To know about more such companies, check out our recommendation service - Forever Stocks.
Value investing is an investment approach that allows one to profit from undervalued stocks. It is based on the idea that each stock has an intrinsic value, i.e. what it is truly worth.
Through fundamental analysis of a company, we can determine what this intrinsic value is.
If the intrinsic value is higher than the actual stock price of the company, then the stock offers an investment opportunity. It's like buying a Rs 100 note, for Rs 80.
Conversely, if the intrinsic value is lower than the current market price, then the stock is 'over valued' and should be avoided. Think a Rs 100 note selling for Rs 120.
There is no clear winner as both focus on different investing strategies. It is up to investors to identify their investing goals and choose accordingly.
Growth stocks are more volatile than value stocks but have the potential to rise in price substantially. On the other hand, value stocks are low-risk, and offer regular dividends but can't fulfill short-term investing goals.