On its face, International Business Machines (NYSE: IBM) looks very attractive to value investors. The stock trades near its 52-week low after falling 20% since February and currently boasts a 4% dividend yield. IBM also trades at a 10% discount to its finbox.io intrinsic value estimate which is calculated from twelve separate valuation analyses.
The term that is being thrown around with increasing frequency is value trap. A value trap refers to a stock that has fallen out of favor and looks cheap because it trades at a low valuation but ultimately fails to recover. Value traps are often shares that have performed very well in the past, and then after an extended period of price weakness appear to be cheap.
