Wednesday, August 01, 2007

Arne Alsin: Bargain stocks go undetected

Bargains don’t arrive at the stock market wrapped in pretty packages tied with a bow. You are not going to find bargain stocks among companies that are thriving, that are consistently generating impressive operating performance. The stocks of thriving companies are almost always fully valued and frequently overvalued.

If you are a true bargain hunter, there is but one place to look. That is in the stocks of companies that have hit a rough patch, that are operating at subnormal levels because of short-term problems. It is fair to say that as the level of negativity surrounding one of these stocks increases, the likelihood that the stock is materially undervalued also increases.

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