We all want to feel like we’re getting a deal. We coupon, we look for discount codes, and we wait for Labor Day to head to the car dealership or the mattress store.
We do it as consumers and as investors — with stocks we hunt for bargains, hoping to recognize an absurd value before the rest of the market catches on and shares rocket up.
Some people turn to penny stocks or look for the stocks under $5 or $10 hoping to make some easy money. But that’s actually one of the most destructive ways to invest.
In this video from our YouTube channel, we break down the difference between stock price and valuation and explain why seemingly expensive stocks (based on price) can actually be “cheap” stocks. We also explain the huge mistake of fixating on share price, or even focusing on just low P/E stocks if you’re trying to follow the tenets of value investing. Plus, we give you some cheap stocks for your watch list!
A full transcript will be posted after the broadcast finishes.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Chris Hill has no position in any of the stocks mentioned. Emily Flippen owns shares of Constellation Brands. Ron Gross has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Texas Roadhouse. The Motley Fool recommends Constellation Brands and Zynga. The Motley Fool has a disclosure policy.