Value investing is the art of finding stocks that trade for a discount relative to their true, or intrinsic, value. This concept is easy to understand, but in practice, finding undervalued stocks can be very hard to do. After all, if a company is obviously undervalued, everyone would buy it, the price would rise, and it would no longer be undervalued.
So, to be a truly effective value investor, you'll need to find the value stocks that are trading for bargain valuations that few other people know about. To do this, you'll first need to familiarize yourself with some important value investing concepts and some essential investment metrics. You'll also need to develop your own system of analyzing stocks and finding those that trade for less than they're truly worth.
With that in mind, here's a rundown of what you should know before you get started, so you can invest in value stocks the right way and find overlooked bargain opportunities of your own.
Source Fool.com