Definition
Deep value investing seeks stocks trading at extreme discounts to assets or earnings, often in distressed or hated sectors. Unlike quality-focused value investing, deep value may buy troubled companies if the price is low enough. It requires contrarian conviction and patience.
Formula
Often screens: P/B < 0.5, P/E < 5, P/FCF < 3
Example
Buying a stock at 0.3x book value ($3 per share with $10 book value) even though the company has declining revenue, betting the assets provide downside protection.
FAQ
What is Deep Value Investing?
An extreme value approach buying severely undervalued stocks regardless of quality.
How do you calculate Deep Value Investing?
A common formula for Deep Value Investing is: Often screens: P/B < 0.5, P/E < 5, P/FCF < 3
Why is Deep Value Investing important?
Deep Value Investing helps investors evaluate valuation and make more informed decisions.