The best value investing blogs will provide actionable tips, just as we do with our content. Discover our value investing advice in this article now

Value investing is an investment approach that follows the basic model set by the pioneers of conservative investing, Benjamin Graham and David Dodd. Value investing is also the preferred investing method of Warren Buffet, the fabled modern-day investing expert.

We aim to be among the best value investing blogs because of our deep understanding of the subject. At the core of the value investing approach is identifying well-financed companies that are well-established in their businesses and have a history of earnings and dividends. They are likely to survive any economic setback that comes along, and thrive anew when prosperity returns, as it inevitably does. Value investors have long-term mindsets when it comes to investing.

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The best value investing blogs will offer these valuable investing tips

Value stocks are stocks trading lower than their fundamentals suggest. They are perceived as undervalued, and have the potential to rise.

When you look for stocks that are undervalued, it’s best to focus on shares of quality companies that have a consistent history of sales and earnings, as well as a strong hold on a growing clientele.

High-quality value stocks like these take some work to find, even when markets are down. But when you know what kind of stocks to look for, you can discover them. Here are three of the financial ratios we take a look at as a useful guide to spotting them:

Price-sales ratio: This measure represents the ratio of share price to per-share sales and is not as widely known as the p/e, or price/book ratio. Still, it can be even more important in pinpointing an undervalued stock. Sales are more stable than earnings, so a company’s p/s ratio can tell you more about it than its p/e. Sales are less subject to manipulation by management or distortion by accounting rules. When a company’s shares trade for less than its per-share sales, it may be cheap. On the other hand, only a handful of companies are worth more than say, three times sales. But companies that deserve a high p/s may prove to be your best investments.

Price-earnings ratio: The p/e is the ratio of a stock’s market price to its per-share earnings. Generally, the rule is that the lower the p/e, the better, and a p/e of less than, say 10, represents excellent value. We calculate each p/e ratio using the most current financial data. But we also verify the “quality” of the earnings. This means we factor out low p/e’s that arise if a company sells off assets or subsidiaries and records a large one-time gain. (That inflates the p/e, and is not representative of its true ongoing operating earnings.) Similarly, we add back any one-time write-offs so we don’t miss any stock that has a low p/e on an ongoing basis.

Remember, a low p/e can be a danger signal. A low share price in relation to earnings may mean earnings are falling or about to fall. That’s why we don’t view p/e ratios in isolation. Instead, we check to see if other ratios confirm or contradict their value.

Price-cash flow ratio: Cash flow is actually a better measure of a company’s performance than earnings.

While reported earnings are subject to accounting interpretation and can be restated in later years, cash flow is really a measure of the cash flowing into a company less cash outlays. Simply put, it’s earnings without taking into account non-cash charges such as depreciation, depletion and the write-off of intangible assets over time. Cash flow is particularly useful in valuing companies in industries where depreciation and depletion charges are based on the historical value of assets, rather than current values — industries such as oil & gas and real estate.

The best value investing blogs will also mention hidden assets

For a long time, we’ve written about the “heads-you-win-tails-you-break-even” phenomenon. That’s what you get in an investment that exposes investors to limited risk of long-term loss, but one that can deliver healthy if not substantial returns.

These situations sometimes come about when a stock has been an unimpressive or weak performer for a number of years. When that happens, investors often focus on the earnings weakness and lose sight of the company’s assets.

If you buy a stock for its hidden assets, but those assets stay hidden or ignored by investors—or turn out to be less valuable than you thought—it can’t hurt your investment. By definition, a stock’s hidden assets have not had much impact on its price. If you paid little if anything for the assets, you have little to lose. But the best hidden assets will eventually expand a company’s profit, grab investor attention, and push up its stock price.

Use our three-part Successful Investment approach, which lets us to stand among the best value investing blogs 

1. Invest mainly in well-established, dividend-paying companies;
2. Spread your money out across most if not all of the five main economic sectors (Manufacturing & Industry; Resources & Commodities; the Consumer sector; Finance; Utilities);
3. Downplay or avoid stocks in the broker/media limelight. 

What is some of the best investing advice you’ve read in a value investing blog?