Completed 3 sets of stock valuations, need to be able to compare those to the current market price to determine whether or not its over or under valued.
2006-12-02 14:51:57 · 2 answers · asked by rico1113 1 in Business & Finance ➔ Investing
If you are very sure about your methods, and the stock price is much lower than your calculation than you should be buying. But make sure you are question your techniques. There are many ways to value a company. And different types of companies should be valued with different measures. IE. A mineral or oil company shouldn't be valued on PE, but on reserves, and cost to produce. There are many more examples.
Finally, lots of undervalued companies stay undervalued for a long time. Just because you find value doesn't mean it'll start jumping. You may have to wait until the market starts looking too.
2006-12-02 15:52:10 · answer #1 · answered by Ryan W 2 · 0⤊ 0⤋
With thousands of stocks to choose from, developing a systematic approach to evaluating stocks can make it easier to make your selections. The first step is to narrow the options from the thousands of possible choices to ones most likely to meet your objectives. That typically involves screening companies based on criteria important to you. For instance, if you are interested in growth stocks, you might look for earnings growth over a certain percentage. Or for value stocks, you might look for companies with low price/earnings ratios or low price-to-book values.
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2006-12-02 15:59:00 · answer #2 · answered by buklao 3 · 0⤊ 0⤋