Stocks on sale and trading under the street’s most bearish target price It is natural for us, as humans, to drive a hard good bargain. We like things to be on sale: 50% off, Clearance Sale, Everything Must Go. These words are music to our ears. Value investors ascribe to the mantra of buying stocks when they are trading “cheaply”. Of course, the definition of cheap can be a subjective matter. My precious could well be your junk. Value investors are also rather susceptible to falling into the “value trap” conundrum. They buy into cheap stocks that can remain cheap for a prolonged period (think IBM). The reason why such stocks remain on sale “indefinitely” is because their fundamentals have been eroded. These stocks are often incumbents who have lost market shares to new entrants. They have rested on their laurels for far too long and consequently lost their competitive edge. These...