After one of the worst markets in many years, investors are hoping for a change in 2023. Although there has been a slight improvement over the past few weeks, the S&P 500 remains down 15% in 2022. Nobody likes to see value erased from their portfolios, but taking a page from the playbook of Warren Buffett -- one of the world's most successful investors -- you can focus on the cheap opportunities in the market right now that can set you up for fabulous investing success long term. Lululemon Athletica (NASDAQ: LULU) and Global-e Online (NASDAQ: GLBE) are two great choices.
But before we take a closer look at each of these opportunities, let's first establish a framework to determine what makes a stock "cheap." When talking about stocks, cheap typically refers to the valuation rather than the actual price. A share price with three digits can be "cheaper" than a share price with two digits because the valuation is relative to various metrics.
Even within that framework, valuation needs to be viewed in relation to historical trends and growth prospects. A price-to-earnings ratio (P/E) of 25, for example, may seem cheap, but if the stock isn't going anywhere, that would be called a value trap. If a company with a price-to-earnings ratio of 50 has high growth prospects, it may not be considered expensive when taking that into account.
For further details see:
2 Cheap Growth Stocks to Buy Before 2022 Is Over