This column was originally published on RealMoney on March 10 at 3:00 p.m. EST. It's being republished as a bonus for TheStreet.com readers.At any given point in time, there are always stocks that are cheap enough to buy. Even in a bear market (sometimes, particularly in a bear market), there will be growing sectors that have stocks that are trading below net asset value, or are trading at a discount relative to cash flows, or present an opportunity on some other metric. Additionally, there will be stocks that have sold off too quickly for irrational reasons (being deleted from an index, for instance, or missing earnings by a penny) and are worthy of a short-term trade. In this vein, I took a look at the following strategy:
- On the first day of every month, buy every stock that is trading at an enterprise value-over-EBITDA multiple of less than 7.
- Use 2% of equity per trade and redo the portfolio on the first day of each month.
|Value Portfolio Equity Curve |
There was room to be more aggressive
|Click here for larger image.|
|Source: Formula Capital|