How do you find potential companies that are undervalued?

Certainly not an easy task we can do in 5 minutes.

Buffett, Munger, Peter Lynch, Li Lu, Mohnish Pabrai... Just to name a few value investors with outstanding performances... Have agreed that one place to start is your circle of competence. That could be the industry/sector you work in/have a good grasp of.

Another way is to look at the large indices like S&P500. Look at the companies that are well known or with high weightage there. Study them and do your analysis to sieve out which ones are strong to you. Of course, these popular ones tend to stay overvalued for a long time. Hence, when the market presents an opportunity, will be a waste not to take it.

Example:

During the panic selling last year, a lot of big tech became very undervalued and gave me the chance to buy based on value. I have no clue if it will continue to go down more, but if it did, I will be happy to get a bigger discount. This is the advantage of being a value investor, we always want a market crash.

Other than an entire market drawdown, you could have sector specific/company specific drawdowns.

E.g. Financials and cyclicals were very unloved with drop in interest rates and high gains in tech stocks late last year. I swapped out my 100% tech portfolio to be fully invested in cyclicals. During the recent weeks while the tech stocks I used to own experienced a drawdown/sideways crawl, My cyclicals/financials have gone up +25-40% since I bought them when no one wanted them.

Last few weeks once again featured an opportunity for certain tech stocks to grab them at reasonable prices, wouldn't say cheap, but reasonable. And I have much more belief in tech compared to financials/cyclicals anyway so I've used this opportunity to start adding back into tech.

Hope this gives you an insight on sector rotations, market crashes and how to approach them from a value standpoint without knowing what happens in future.

NO ONE can predict the future.

But, is there a need to?​​​

The short answer is it does not matter if you find it or not. you need to let other people know that this is a undervalued company.

Imagine this.

In a world with only 100 people. you found a good undervalued company call "A" but as long as the other 99 people do not know about this and no one is trading "A". They are trading everything else.

The price of "A" will not move