5 Ways to Identify Value Traps [2017-2021]

0:00 Introduction
0:52 What is a Value Trap?
3:35 10 Lowest P/E Stocks [May 2017]
5:34 How to Find Free Data
5:59 Value Trap #1
8:52 On Conflicting Signals...
9:32 Value Trap #2
11:08 Value Trap #3
13:32 Summary of Value Traps
13:54 5 Things to Look For
14:53 Do Your Homework!
15:30 Warren Buffett's Favorite Ratio

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DATA
The data in this video were all sourced from Zack's free stock screener. Data was as of September 2021. If you're checking this video out months after release, many of the data points may be inaccurate; I hope the concepts remain evergreen, but you may need to refresh things on your end. (Let me know if you want some help and I can do a video on that.)

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❓️FAQ: Let me know in the comment section.

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THE REST
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DISCLAIMER
This is entertainment only, not investment advice. All opinions expressed are my own. Any stocks or ETFs mentioned may be owned or taken a position within the next 48 hours. Neither the information nor any opinion expressed it so be construed as a solicitation to buy or sell a security of personalized investment, tax, or legal advice. This is prepared for informational purposes only. It does not address specific investment objectives, or the financial situation and the particular needs of any person who may receive this report. The information herein was obtained from various sources. Dividend Growth Machine LLC does not guarantee the accuracy or completeness of information provided by third parties. The information in this report is given as of the date indicated and believed to be reliable. Dividend Growth Machine LLC assumes no obligation to update this information, or to advise on further developments relating to it.

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[NathanWinklepleckCFA]

Have you fallen for any value traps? Let me know in the comment section! And if you have any questions you'd like me to answer, drop them down below. Thank you all for your support; it's been so great to build a little community here. :) Have a great weekend everyone!

[robertg]

I learn a LOT from your channel. Currently redoing my whole portfolio pretty much because of what I've learned from your videos

[davehafso]

Thanks a ton for the detailed breakdown in answering my question! Really helpful and looking forward to more great videos

[NOT-FINANCIAL-ADVICE.]

Interested in tikers CHWY, CHD, and VFC, defensive type Consumer Discretionary stocks, for the most part, but they seem overvalued. Thoughts??

[Moe-bgor]

What’s the best approach if one is stuck in a value trap for over a year with no light at the end of tunnel? Is it good to sell and move on or wait & watch for longer term?

[richardgordon]

Really good and useful video. Thanks!

[jeffryramirez]

Nathan, hope all is well. what books you recommend for learning the fundamentals on valuing stocks. Thanks a lot!

[AndreyZalivin]

Great video, thanks for this review, very helpful to avoid value traps.

[rickl]

Another great point today. Many people would agree that ROIC is one of the top metrics to look at for stocks/ETF's. Usually 8-10% for a strong long term holder. Well done, sir

[adrianneaga]

Another super-useful video. Thank you.

[johnburger]

Another excellent video Nathan! Really enjoyed watching 👍

[gurusukh]

Investors almost always overestimate current trends, but underestimate the long-term future potential, especially in growth stocks.

Case in point, stocks like Adobe, Generac, Microsoft, Enphase which were incredible bargains just a few years ago. These names were trading at low PE ratios back then for what they're earning today. It's the future earnings and cash flows, discounted to current value that matters the most IMO. So your video does a great job of capturing that message 👏 👍

[sublyme]

At $10 a share as of 3/27/23, I actually really like Goodyear :)

[wasbii]

So I looked at these standards and from what I assume, INTC isn't a value trap.
It has increasing consistent revenue, operating net margins have increased, earnings have gone up, has dividend growth along with earnings growth, ROIC is consistent