Longtime readers know that I come from a background that might be considered “value”-oriented.

Buffett is one of a handful of names that come up when referring to “value” investing. The term can sometimes be misleading, and we can argue whether Buffett’s investing style today is really “value” or not. But today, I want to offer some general thoughts on the approach individual investors should take when researching value picks.

Unfortunately, no predetermined formula will allow investors a clear-cut path to uncover the best picks. Investing is always a delicate balance of both art and science.

But I’ll take a stab at it. And hopefully, by the end, you’ll come away with something you can use in your own portfolio.

How To Find Winning Value Picks Like Buffett

To pinpoint sharply undervalued stocks, you can start by quantitatively screening for companies that score well in the key valuation metrics like book value, cash flow/enterprise value, and RoIC (my personal favorite), as well as a host of other important fundamental criteria.

However, don’t assume that a list of names that filter through ratio analysis screening is all that is necessary to identify winning stocks. Carefully evaluate each idea generated by those screens. And closely examine and weigh any non-numerical data.

Next, consideration should also be paid to the company’s industry and whether or not the firm has a recognizable edge over its peers. Over at High-Yield Investing, we always try to invest in companies that benefit from a variety of distinct and defensible competitive advantages. These advantages could take the shape of a powerful brand name, a unique product, or even a patented technology. Remember, companies with sustainable competitive advantages are much more likely to maintain a high level of profitability than those without them.

Determining whether a company operates in a cyclical market, like automobiles, is also a good idea. Ask yourself whether or not the company’s economic moat is wide enough to protect the firm’s profitability under difficult conditions.

Research, Research, Research…

Knowledge is power, and knowing as much about a prospective company’s operations is always important. This includes a thorough look at its industry, vendors, customers, competitors, etc. Digging through old press releases on financial websites is a good starting point. The company’s most recent quarterly and annual reports should also be required reading. But remember… press releases written by a firm’s investor relations department will nearly always paint the company’s prospects and results in the most favorable light possible. Therefore, it is important to balance that information with objective analysis from other sources.

Remember, the most valuable articles or bits of information can sometimes run contrary to your opinion on a company. In other words, don’t fall prey to ignoring possible warning signs simply because they challenge your thesis on a stock. Instead, try to poke holes in your own arguments. This will help eliminate costly investing mistakes and allow you to invest with more conviction.

Closing Thoughts

If you know anything about Berkshire, you know that Buffett’s record gains are nearly impossible to duplicate. That’s okay because the truth is we don’t have to…

But remember that successful investing doesn’t necessarily involve uncovering a bunch of potential picks. The key is to be confident to pull the trigger when you find a good one. In other words, when you’ve finally made up your mind, invest with confidence and hold for the long term.

The truth is anyone can create lasting wealth in the market by using an approach like this.

It’s not too late for you to get started, either. All it takes is a solid foundation. That’s why I suggest checking out my report about “bulletproof” income payers…

These picks have proven to be so strong, so reliable, and so generous… you can count on them no matter what happens with the economy.

This group of high-yield stocks can serve as the bedrock of your portfolio. They’ve all provided fantastic long-term returns, growing dividends (and their share prices) with each passing year. And I have little doubt that they’ll continue to do so for years to come.

Go here to check them out now.