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Sunday November 9, 2014 9:23 AM

Q: What’s a good website where I can study and compare mutual funds?

— J.W. Evanston, Ill.

A: There are many. Morningstar.com is a key mutual-fund resource, offering details about thousands of funds’ performance, fees, taxes, holdings and much more.

The folks at the Financial Industry Regulatory Authority, meanwhile, offer useful comparisons via their Fund Analyzer tool (at finra.org/fundanalyzer). There, you can enter fund names or ticker symbols and see side-by-side comparisons of fees, performances — and, importantly, performances after fees have been subtracted. That’s a handy way to see how inexpensive index funds often trump managed funds, even if the managed funds sport slightly higher returns.

Fool’s school: Don’t get caught in value trap

To invest well, you need to not only find great buying opportunities, but also avoid “value traps,” which are stocks that appear to be great values but actually are not.

Value traps to recognize:

Beware of dominant companies whose rapid growth rates have slowed or stalled. Their price-to-earnings (P/E) ratios might be well below their averages, and perhaps their earnings are still growing, but their important top line, their revenue, might not be growing much. Some companies expand too quickly and spend too much on acquisitions and stock buybacks. Technology might have evolved, and newer, stronger competitors might have emerged, too.

Cyclical companies are involved in sectors such as autos, appliances, steel, oilfield services, semiconductors, travel and construction. Their fortunes rise and fall with the economy, and their valuations sometimes are counterintuitive. They look the cheapest when they’ve reached their priciest, and vice versa. A time of high profits means that a time of low profits is ahead. So consider these companies when their P/E’s are rising, not shrinking.

Beware, too, of companies paying out generous dividends that, on closer inspection, can’t seem to afford them. Check the payout ratio, dividing the annual dividend payout by the earnings per share. A steep one (say, above 80 percent) is worrisome, unless you have faith that earnings are due to increase soon.

Remember, too, that a high yield is often the sign of a fallen stock price.

Victims of innovative, rule-breaking companies also should be avoided. Without the power to make or break rules, such a company is standing on the track as a technological freight train is about to pull through. Except for a Hail Mary or two, these companies are often out of options. Examples include newspaper companies getting bowled over by the Internet, or video-rental companies, which were felled by a new age of digital-content distribution.

Instead of considering value traps, seek great, simple-to-understand businesses at good prices.

To see which compelling stocks we’ve recommended recently, try our “Motley Fool Inside Value” newsletter for free, at insidevalue.fool.com.

Foolish trivia

I was started by two brothers in Germany in 1924, in their mother’s laundry room. Today I’m the world’s second-largest sporting-goods company, employing more than 50,000 people in more than 160 countries and racking up sales of more than 14 billion euros annually. My brands include my name, plus TaylorMade, Reebok, Rockport, Ashworth, Adams Golf and Five Ten. My 2013 offerings included 257 million pairs of shoes, 341 million pieces of apparel and 54 million pieces of hardware (such as weights, golf clubs, balls and bags). I recently revived my iconic Stan Smith sneakers. Who am I?

Last week’s trivia question: I was launched in 1993 as a division of electronics retailer Circuit City, and then spun off to be independent in 2002. Today, based in Richmond, Va. I’m America’s largest used-vehicle retailer (and its third-largest wholesaler of used vehicles). At my 140 superstores in 70 markets, I offer no-haggling prices and “Quality Certified” vehicles. I sell more than 500,000 used cars annually and auction off more than 300,000 wholesale vehicles. In total, I’ve sold more than 5 million cars. I take in more than $12 billion annually. I’ve been cited as a great employer for my 20,000-plus workers. Who am I?

Answer: CarMax

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