Value Preset: Finding Stocks Priced Below Their Fundamental Worth
How the Value preset works, what low P/E and P/S really mean, and how to use value stocks as high-yield CSP candidates when the market overreacts to short-term news.
What the Value preset applies
- P/E ≤ 20
- P/S ≤ 4
- D/E ≤ 1.5
- Market Cap ≥ $1B
This combination surfaces stocks that are reasonably priced relative to earnings and revenue, with manageable debt — the classic value investing criteria.
Value stocks and the wheel strategy
Value stocks are particularly interesting for CSP sellers because:
- Lower assignment risk — you're not paying a premium valuation.
- Mean reversion — undervalued stocks tend to eventually re-rate to fair value.
- Higher put premiums relative to price — beaten-down stocks often have elevated IV.
The value trap problem
The hardest challenge with value investing is distinguishing:
- Undervalued: Strong business temporarily out of favour.
- Value trap: Weak business that deserves a low multiple.
Add these filters to reduce value traps:
| Filter | Setting | Purpose |
|---|---|---|
| Net Margin min | 5% | Confirms the business is actually profitable |
| 5Y EPS Growth min | 3% | Earnings are growing, not declining |
| Gross Margin min | 20% | Basic pricing power exists |
How to use the Value screen
- Click Value in the preset chips.
- Sort by P/E ascending — the cheapest names first.
- Cross-check the top 20 names: why is each stock cheap?
- For each candidate, check the options chain for put premium — elevated IV on value stocks can be surprisingly attractive.
- Only trade the ones where you understand the business and are comfortable with assignment.
A worked example
A large-cap industrial company with P/E 14, P/S 1.2, D/E 0.8, Net Margin 12%, and 5Y EPS Growth 6% — that's a solid value candidate. Sell a 30-delta monthly put 10% below current price, collect 1.5% premium, and let the fundamentals support recovery if assigned.
Frequently Asked Questions
How is the Value preset different from the Low Debt preset?
The Value preset focuses on valuation multiples (P/E, P/S) to find stocks priced below fundamental worth. The Low Debt preset focuses purely on balance sheet conservatism — a company can be expensive and have low debt. They screen for different things and work well combined.