What is this company’s debt level 韩国部署剩余萨德 女教师疑现钏路市

Health Many people start investing in stocks without doing any fundamental analysis about the health of the company. They just start investing in stocks on the recommendation of a stock investing newsletter or a stock investing message board.If you ask them about the fundamentals behind the stock, they start sweating and looking here and there. You don’t have to go to Wharton, Harvard or for that matter Stanford to learn fundamental analysis. By using the rule of K.I.S.S, ou can keep your fundamental analysis very simple but still know whether the stock is overpriced or underpriced in the market. When you do fundamental analysis of a company and its stock, you should always start with these four basic questions! 1) What is this company’s value relative to its peer companies? 2) What is this company’s growth rate? 3) What is this company’s return on capital? And 4) What is this company’s debt level? By answering these four question through fundamental analysis, you can find the true value of a stock. Now, there is something known as intrinsic value of a stock. Understanding this concept is very important for you as an investor. You don’t need to make complicated calculations like a Wall Street Stock Broker to find the exact intrinsic value. What you need is a rough idea about what the intrinsic or true value of a stock should be. If you can figure out through simple fundamental analysis that the intrinsic value of the stock should be between $25-35 and it is trading at only $15 in the market. This means that the stock is underpriced in the market and will be a good investment overtime. If you don’t know intrinsic value, it is the supposed true value of the stock. It may not be what the market value at that time is. But over time, the stock will surely attain what it’s intrinsic value is. Now why fundamental analysis works? Suppose, you have a apartment that you rented for $1500 per month. Compare this with your friend’s apartment who pays $2500 per month. You can easy figure out that the value of your friend’s apartment is double your apartment. In the same way, companies are value by their earnings. Each company reports its quarterly earnings statement. By looking at the quarterly earnings report of different companies, market figures out which stock has more value. So a company’s value is based on its future expected earning potential. Another reason why fundamental analysis works is that arbitrageurs keep the prices in check as they are always looking for mispricing in the market. This mispricing in the market gives them an opportunity to make riskless profit. So, they immediately pounce on the arbitrage opportunity. When many try to take advantage of that arbitrage opportunity, the mispricing is leveled out and the market prices equal out. In the same way, suppose a company XYZ has its stocks selling for $30 in the market. The market value of the company is $300 million. It has got $350 in cash and no debt. Arbitrageurs will immediately step in. One would buy the company for $300 million and immediately pay for the purchase with the cash the company has. So, fundamental analysis works because in efficient markets, there is no riskless arbitrage opportunity available. Investors, firms and governments are always looking for arbitrage opportunites and immediately pounce on one that can give them a riskless profit. About the Author: 相关的主题文章:


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