Five Common Traits of Successful Value Screens


Though investing gurus differ in what they look for in a stock, there are five common traits we see across the AAII value-oriented screens.

Wouldn’t you love to get Benjamin Graham’s thoughts on whether a stock you are considering is priced attractively?

Or how about getting a warning message from David Dreman before you fall for a common emotional trap after a beloved company just missed its earnings target? Who wouldn’t want some tips from Warren Buffett on how to identify if a company has a competitive advantage?

We have adapted the works of the best investing minds on Wall Street and created simple stock selection rules that individuals can use to find attractive investments. AAII members can learn more about stock market gurus and their strategies and even see which stocks currently match each approach on the Stock Screens segment of or in AAII’s stock screening and analysis tool Stock Investor Pro.

If you look at the approaches of these gurus and stock market experts, you will quickly notice that successful approaches within a given investment style tend to have similar elements. Sure, the Dreman approach on may emphasize the price-earnings ratio to locate value companies while the Piotroski strategy uses the price-to-book-value ratio, but every successful value-oriented approach not only looks for a low price-related multiple, but also some measure of expected growth or financial strength.

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