How to find a stocks real value?

Discussion in 'Stocks' started by MoneyMaker, May 25, 2008.

  1. robbie380 ipo.. call it ROBB, find an underwriter :D
     
    #21     May 26, 2008
  2. I would say when you buy stocks, the vast majority of the time you are buying them OVER valued. Simply because stocks trade for future earnings "potential." GOOG has a lot of potential so you have to pay up, but what if that potential is never realized? I guess the more competitive the industry, like tech, the more likely you're paying to much for a stock.

    I think thats why buffet made out so well, he likes to buy stocks that make simple products that build a strong brand and have a high barrier to entry.


    So what you want to do is buy a stock at "fair" value. That way you don't feel like you're getting ripped off.
     
    #22     May 26, 2008
  3. just don't buy overvalued stocks. a company with a 50x pe ratio could be undervalued...
     
    #23     May 26, 2008
  4. doublea

    doublea

    Try Rule #1 by Phil Town. You should be able to get one on your local library.
     
    #24     May 26, 2008
  5. Easy.

    #1 Growth - If there is any question as to growth, then the stock gets pummelled.

    #2 Float - Are insiders constantly selling? Is the company going to split the stock or offer more to the public?

    #3 Bias (most important) - Which way is the stock trending? Higher highs? Higher lows? ???

    Lets take one good example which is Beazer Homes:

    #1 Growth- Great growth from 2000 to 2006. Then growth got questioned in 2006 and thats when the stampede for the fire doors began.

    #2 Float- 36 million (perfect)

    #3 Chart Pattern (bias) - From 2000 to 2006 the trend was clearly up and then the stock started sliding. You can see what looks like a rough head and shoulders top in 2006.

    Therefore, how can you tell? Just know the 3 questions. Is growth questioned? Is the float increasing? What does the chart tell you?

    Another good one, HANS. Right around 2006 there came several school advisory boards questioning the health behind energy drinks. There were also many competing products that came out and its obvious that companies like Coke&pepsi were targeting the energy drink market.

    There is your question of growth.

    The stock split sometime in 2006 increasing the float.

    Then in 2006 the chart became weird with the stock suddenly making new lows. Bias.
     
    #25     May 26, 2008