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WHY going for fundamentally sound stocks can increase your chances of success.
IT is my opinion that value investing is the most successful method of investing in equities. It grows out of a common sense approach to investing: that you are more likely to make money by investing in companies with high and growing earnings (in relation to their stock prices) and with strong balance sheets.
Many successful investors have adhered to and expounded on value investing, such as Sir John Templeton and Warren Buffet. Value investors focus on searching for 'bargain' stocks. These are stocks that are trading below their 'intrinsic' or 'true' values.
In general, investors look to a wide range of criteria in addition to just price-to-earnings, price-to-book value and dividend yield to determine whether a stock is in fact a bargain. These additional criteria include profit margins, debt/equity, return on capital employed, return on equity and many others.
A fundamentally …