Study of Value Investing based on a Modern Approach

Abstract

Market exploration is necessary to examine and identify attractive deals. This endeavor requires potential investors to analyze the market using effective market hypotheses. This paper focused on exploring value investing as a market and investment pathway. The applicable investment paradigm requires that investors purchase shares in Industries and organizations with promising returns on investment. As a result, investors should target organizations whose share price is lower than the true value. This paper investigated the retail trade industry by exploring randomly selected 20 companies. The 20 companies provided an opportunity to explore the total return of investing in companies between 2015 and 2021. This study used the gross profit margin and return on assets (ROA) as suitable financial ratios to explore the total return of investing in the selected companies. The paper justifies the applicability of gross profit margin and returns on assets (ROA) as financial issues distinguishing between 25% top performers and 25% bottom performers of the 20 selected companies. The analysis showed that 25% of top performers excel in corporate attributes, enhancing the gross profit margin and return on investment. In contrast, the 25% bottom performance lags in market attributes that enhance gross profit margin and return on assets.