How do I find undervalued stocks to purchase?

berrytrain: How do I find undervalued stocks to purchase?
Right now I am just typing in letters into Yahoo Finance, and looking at the charts. Surely there is a way to screen for stocks that fit my criteria. I want a stock that is currently priced low, but that has significant growth potential. How do I find these without reading countless articles from so-called experts.

Answers and Views:

Answer by Funk001
If anyone would know the answer to that question we would all make loads of money…

Answer by John W
Joel Greenblatt has a simple ranking system that he describes in his book “The Little Book That Beats The Market” and he offers a free screen on his website www.magicformulainvesting.com

Answer by eve
I think you’re going about this backwards, you don’t go to a store looking for ‘anything’ undervalued? you go for shoes or whatever and you then compare the shoe prices.
– You have to do that with stock, what are you looking at ? lets say you believe the next big movers will be energy, maybe compare Natural gas stocks to each other , or oil drillers. Then you compare what’s undervalued.
– Or maybe you think Health Care will soar, so you compare those stocks.Abbott vs Teva.
– I use this if I can’t decide between 2 stock that I like, I use the p/e,analysis esta. and charts I don’t know your procedure/criteria..

– Also just because something is considered undervalued, doesn’t mean its gonna go up, just like something that is overvalued may still soar, based on trends .

Answer by Italian girl
If the stock has significant growth potential, most likely it is not undervalue but overvalued. To find potentially undervalued stocks look for ones that have recently had rough times and are potentially on the verge of a turn around. Generally speaking, small cap stocks are more likely to be undervalued than large cap stocks since they do not have a large Wall Street following. There are several ways you might find these. One way is to sign up with American Association of Individual Investors. They continually run screens of only small cap stocks that are potentially undervalued. Another way is to look at the holdings of small cap mutual funds to get some ideas. You can also set up a Yahoo screen screening for small cap stocks that have a pe of under 25, increasing earnings and sales, and low debt/equity. AAII is on the internet.