Undervalued stocks in brief

• Identifying and investing in undervalued stocks: A complete guide

‘Undervalued’ stocks refers to companies sporting a market capitalisation which is less than what is presumed to be their true intrinsic value — where intrinsic value is based on an analysis of a company’s fundamentals, such as its assets, earnings, and cash flow, rather than market sentiment or speculation.

It’s often calculated through discounted cash flow analysis, a dividend discount model or a comparison of the company’s price-to-earnings ratio to the sector average. Buying undervalued stocks is the keystone of all value investing strategies, including Warren Buffett’s investing philosophy.

• The market’s valuation error

The…