Value Investing players aim for undervalued stocks in the stock market, hoping to buy low, and sell high. But to many people, Value Investing is a mystery. However, if you can find bargains at a shopping store, then you have the necessary skills to find value stocks.

A bargain at the supermarket is a high quality item at the cheapest price. This is also the value stock investing strategy. This strategy relies on your willingness to study carefully the fundamentals of the companies finances.

Stock fundamental analysis is a strategy of knowledge and patience. A value investor tries to find companies that have solid fundamentals and display promise for continuing to maintain those strong numbers into the future. Part of the job is discovering companies that may be undervalued by the markets.

And the other part involves holding on to those stocks for the long run, without getting scared off by occasional short-term dips in the price of the stock.

Probably the most famous value investor is Warren Buffet. Buffet is chief executive of Berkshire Hathaway and is one of the most successful investors in history. In 2008 he was ranked by Forbes as the richest person in the world with an estimated net worth of approximately $62 billion.

In the early part of his career at Berkshire, Warren Buffet focused on long-term investments in publicly quoted stocks, but more recently he has turned to buying whole companies. His mentor, in fact, was the Father of value investing, Benjamin Graham .

In her book The New Buffetology. Mary Buffett, former daughter-in-law of this legendary financial genius and a successful businesswoman in her own right, has teamed up with noted Buffettologist David Clark to create Buffettology.

The New Buffetology examines Buffett’s methods for valuing companies and selecting stocks—it even encourages you to buy a calculator and work through the valuation formulas that Buffett uses when researching companies to buy. The book not only serves as a useful guide to understanding how Buffett invests, it’s an excellent primer to investing in stocks, whether you plan to become a Buffettologist or not.

There is also an Buffetology Workbook to help you along in becoming a value investor.

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Value stocks have the following characteristics:

• low stock price to book value

Low stock price to book value:

To obtain this, divide the total value of a companies assets (as shown on its financial books) by the number of its outstanding shares available. To derive the book value per share, divide this number by the market price of one share of the company’s stock.

Low stock price to earnings (P.E. Ratio):

Divide a company’s earnings (from it’s financial books) by the total number of outstanding shares to derive its earnings per share. Divide this number into the current price of the stock to calculate the P.E. This ratio gives you an idea of how expensive a stock is in comparison to its current earnings.

For example, if a stock was priced at $100 and had a dollar’s worth of earnings per share, then the stock would be trading at 100 times this year’s earnings. Companies trading at less than 10 times earnings, may be bargains.

Higher than average dividend payout:

A dividend is any cash a company takes out of its earnings to pay to shareholders. This is usually paid quarterly in the form of a cheque. The dividend payout ration is measured in percentage, and is calculated by Total Dividends issue divided by net income for the same period.

And what is an average percentage payout? Hmmm. that’s a relative question, and it depends on the current market environment we are in at the time. 2 to 3% could be considered average.

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These portfolios hold some of the best wide-moat businesses in the world that have sustainable competitive advantages, generate copious amounts of cash, and have good balance sheets. They should not just survive this crisis, but thrive when the economy recovers.

If after trying Morningstar StockInvestor. you find it’s not for you, then you can cancel anytime thereafter with no penalty.

Also, Unlimited Stock and Fund Insight from Morningstar gives you access to analyst research reports, portfolio optimization tools, and e-mail alert services.

Morningstar’s formula for investing success is simple: Provide you with powerful tools for narrowing the field of stocks and funds down to the very best.

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So what do you think, is Value Investing a right fit for you and your personality?

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