Cheap? Or cheap for a reason?

Financial crises can wreak havoc with shares. So how can you tell the dud stocks from the bargain buys? Phil Oakley explains.

Recessions can do a lot of damage to company profits and share prices. You only need to look at what happened to the prices of banks, property companies and housebuilders during 2008 and 2009 to see that. Much of the time such a collapse in share prices is justified but the stock market is also more than capable of overreacting.

So there can sometimes be very good money to be made in buying distressed companies. But how do you value them? And how do you tell the difference between shares that are good value, and ones that deserve to be cheap?

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Phil spent 13 years as an investment analyst for both stockbroking and fund management companies.

 

After graduating with a MSc in International Banking, Economics & Finance from Liverpool Business School in 1996, Phil went to work for BWD Rensburg, a Liverpool based investment manager. In 2001, he joined ABN AMRO as a transport analyst. After a brief spell as a food retail analyst, he spent five years with ABN's very successful UK Smaller Companies team where he covered engineering, transport and support services stocks.

 

In 2007, Phil joined Halbis Capital Management as a European equities analyst. He began writing for MoneyWeek in 2010.