[aquaswim47]

A bad company is a company that will have substantial difficulty bouncing back. Increasing cash outflows from operating activities is one sign. Another sign is when inventory increases at a high percentage to sales. Another sign might be when the cash ratio (cash to current liabilities) decreases or when the company's debt increases materially. Increased competition may also result in a decision to sell.

You sell when the fundamentals underlying an investment deteriorate (you cut your losses) or you wish to take profits.

What is a value stock?

A value stock is a stock that is cheap compared to its competitors, while having just as good financials or better. It might be a turnaround company, a good company, or a great company (best of breed). Often times, a value stock will have a very low PE ratio and/or a very low PEG ratio. JCP has had a PE ratio under 10.0 and and PEG ratio of under 0.75. That's incredible for a retail stock! It currently has a PE of 10.5 and a PEG of 0.77. That means the stock has a PE ratio that is less than its growth rate! I heard that it will increase its size over the next 4-5 years and has a cash ratio of over 90%.

I bought JCP at $74 and stuck with it even at $61 per share since its cash ratio increased. Also, I believed the sector would be minimally affected.

LEND would have qualified as a value stock under $6 per share (it's speculative), NSTK under $13.75 per share, CHTR at under $2.50 per share, GS at under $180, and JCP under $70.

GME on the other hand is a growth stock in which you're hoping will increase in value.