How to Find Depressed Stocks in The Stock Market Value Investing

Finding depressed stocks or value investing in the stock market is something you need to learn. If you want to make money in the stock market you need to find bargain stocks that other investors are missing.

Difficulty: Moderate

Instructions

1. When you are starting to learn to invest in stocks take a look for stocks that are undervalued. You need to look and anticipate major changes that will make a stock rise in the future. Look for growth stocks that have had a few bad quarters due to inflation or other factors that they had no control over. This is called contrarian investing. You need to do some research and it might take some time but in the end you will make money from the investment. You should look for stocks that have had disaster strike and share holders are selling especially in companies that have a good long term track record.

2. Look for out of favor securities and hold them until good news brings up the price and sell them for a profit. One of the indicators to look for in a depressed stock is insider buying. If the owners are starting to buy their own stock it could mean that good news is about to break about the company. There are several internet sites that track insider buying. When the markets are down this is a great time to look for this type of stock to invest in. Not all depressed stocks will recover so do some good research and you can find the ones that have the greatest chance to make you profits.

3. Look for a stocks price/earning ratio is less then 15 but has an average of 3% or more over a few years. Make sure to look at the earning the company has made over several years. Just because the price is down could be from other marker conditions that's what makes it a good buy when the markets turn in your favor. You need to be patient and hold on to the value stock and let it recover before you sell it. Keep aware of world news this can greatly affect the price of a stock.

4. If you are looking at oil,energy type stocks weather ,pipe line problems , etc can depress a stock but when the trouble is over many times the stock price will shoot up because the buyers are returning.
   Look for companies that have cut there dividends most owners of the stock will cut and run. This will make the stock price plummet watch for a bottom and after it has stabilized consider buying the stock. This is one of the ways to look for in depressed stocks. You need to watch the company and once they report that they have turned things around the share price will run up.