Cheap Stocks; Defining Cheap Valuations [ANALYSIS]

Do Cheap Stocks Allow Higher Earnings? by Filip Rudnicki [klarman] People say that stocks with low valuation (low P/E, low P/BV, low P/S) are better investments than expensive ones. Is it true? And what does it mean that a stock is cheap? Is P/S = 1 cheap? Or maybe P/S = 2 is cheap? Where is the border of cheapness? Today we’re going to find answers to these questions. To do this I performed a test. I divided all stocks from the market into 10 portfolios. Let’s call them: Extremely cheap stocks Very cheap stocks Cheap stocks Quite cheap stocks Slightly…