There are plenty of ways you can find cheap value stocks for a good price. The key for penny stock investors is to look for value stock that can make them a profit in the end without having to fork over a large amount of cash. Spotting the right stocks takes a lot of skill and investigation; however it can be done. Here are some ways you can find these cheap stocks:

Formula
One formula that seems to work most of the time is called PYAD. This term is broken down to; P/E ratio, yield, assets and debt. For the P/E ratio, this is considered less than 2/3 of the overall market’s average. The yield represents anything that is valued higher than the market average. Assets refer to any ratio under one.

When an investor trades at a discount value (this would be below the initial book value of the assets), this could mean that there is a brighter future for the purchaser. However, this doesn’t mean the investor should let their guard down. It does take time to create a healthy dividend. In some cases, the purchaser will have to wait for the rebound stock. To reduce risk, the purchaser should have no debt (or at least a very low amount). This is to make sure the investor is not digging themselves deeper into a hole. Debt holders often look to be paid before common stockholders (not the other way around). Having to do so could make an investor vulnerable to high-interest expenses. Any type of stocks that are loaded with a lot of debt is not worth investing in or waiting on.

Is PYAD Effective?
There have been many experts who have tested out the effectiveness of PYAD (mostly in the year 2002). Since there is no 100% full-proof way to determine whether a person should invest in a certain stock or not, it doesn’t hurt to use the formula and will garnish better results than not using one. An investor will need to examine a company’s assets before taking a risk.

Potential Value Play
Another method that can be used to invest in cheap value stocks is to use potential value play. This is a good way to determine intrinsic value related to a certain company. The best time to hunt for low cost stocks is when they have a limited downside. Using all of these steps will allow an investor to get the most for his money when it comes to buying big-value stocks.