Bargain hunting with a quality filter
Not every cheap stock is a bargain — some are cheap for a reason. Deep value investing means finding stocks priced below their intrinsic worth, but the classic trap is buying a declining business just because it looks inexpensive on paper.
Deep Value Quality addresses this by combining two complementary lenses: valuation cheapness (low P/E, Price-to-Book below 1.5) with operational health (Return on Equity above 15%, profit margins above 8%, and limited leverage). The result is a universe of mispriced but fundamentally sound businesses — the kind institutional value investors seek.
The strategy draws inspiration from the quality-value blend popularised by researchers like Asness, Frazzini & Pedersen (AQR, 2019): Quality Minus Junk and the classic Benjamin Graham framework .
Screening Criteria
| Parameter | Condition |
|---|---|
| Market Cap | > $1 B |
| Trailing P/E | < 12 |
| Price-to-Book (MRQ) | < 1.5 |
| Return on Equity (TTM) | > 15% |
| Debt-to-Equity (approx.) | < 0.8 |
| Profit Margin | > 8% |
Who is this for?
Investors who believe in buying quality at a discount — and who want the discipline of systematic filtering to avoid value traps. This screen targets large-cap companies with proven profitability that are temporarily overlooked or out of favour.