How to Pick Stocks with Reasonable

First, I look at the Price-to-Earnings (P/E) ratio—it’s a quick way to see how much you’re paying for a dollar of earnings. Compare it to the industry average; if it’s way higher, the stock might be overvalued unless there’s serious growth potential. I’d say anything below 20 is usually a decent starting point for non-tech stocks, but it depends on the sector.

Next, check the Price-to-Book (P/B) ratio. This compares the market price to the company’s book value. Anything under 1 could mean it’s undervalued, but you gotta dig into why—sometimes it’s a red flag.

What’s your risk tolerance? That’ll shape how strict you are with these numbers.

Also, look at free cash flow. If a company’s generating solid cash but the stock price doesn’t reflect it, that’s a buy signal for me.