Criterias to identify undervalued stocks

• Sudden fall in share price
Share price can fall below its intrinsic value.

• Growing earnings
Long term share price follow earnings trend.

• Potential for future growth
Catalyst for future growth ensure earnings growth will continue.

• Historical low price to earnings ratio
Low PE signals low valuation. Low valuation usually results in lower market expectation, hence company is easier to outperform expectation.

• Price to book below 1.00
Buying stock below PB of 1.00 may provide margin of safety.

• High dividend yield
If the stock pays higher dividend yield compared to its peers, it may indicate undervalued.

• Competitive advantage
Competitive advantage means a condition or circumstance that puts a company in a favourable or superior business position.


Below are few stocks that into those criterias:

• Walt Disney
Growing earnings, historical low price to earnings ratio, competitive advantage, potential for future growth

• Starbucks
Growing earnings, historical low price to earnings ratio, potential for future growth

• Celgene
Growing earnings, historical low price to earnings ratio, competitive advantage, potential for future growth, Sudden fall in share price

• Starhill Global REIT
Price to book below 1.00, high dividend yield, competitive advantage, potential for future growth