The Little Book of Big Profits from Small Stocks Summary - Chapter 5

Chapter 5: Shopping the Bargain Bin

1.      Bargain bin stocks are those that are sold below their tangible book value per share (i.e., they are low-priced stocks that sell for less than the value of the assets they own).

2.      Buying this type of stock is like buying something for less than it’s actually worth.

3.      Use stock screener to look for undiscovered growth stocks as follow:

a.       Maximum debt to equity ratio of 0.3 or 0.5

b.      Maximum stock price at $10

c.       Price to earnings ratio of at least 1 (i.e., must have positive PE ratio)

d.      Price to book value of less than 1

Chapter 6: Getting the World Healthy and Wealthy