While ModernGraham supports the bottom-up approach to investing, many investors do utilize the top-down method, whereby an industry is selected before the company itself. With that in mind, this article will take a brief look at the best value stocks of the IT Hardware industry, selecting the five most promising investment opportunities within the industry, and giving a broad look into the industry as a whole.
Out of the more than 500 companies reviewed by ModernGraham, 35 were identified as being closely related to the financial services industry. Of those, only three are suitable for the Defensive Investor, 23 are suitable for the Enterprising Investor, and the remaining nine are considered speculative at this time. Excluding any extreme outliers, the average company was rated as being priced at 127.16% to its MG Value (estimated intrinsic value), with an average PEmg ratio of 23.98. The industry as a whole, therefore, would appear to be overvalued, particularly in comparison to the market (see Mr. Market's Mental State). Continue Reading »