Easy Guide to Finding Good Stocks Using Fundamentals
Step-by-Step: Find Out If a Stock Is Worth Buying
Namaste🙏 investing is very easy if you know how to do it just follow five simple steps and you will get very good returns no matters from which background you are whether commerce or science commerce background or science background you can do you very good investing with this simple 5 tips so let’s start and this blog we are discussing how to find out the most fundamentally strong companies to invest our hard are money in that company to get more returns and two build some wealth. So in brief we will discuss this 5 point so what are this first understanding key important ratios second investor behaviour third promoter behaviour 4th understanding peer competitor and 5th analyse the balance sheet
How to Use a Simple Checklist for Fundamental Stock Analysis
Whatever we are now discussing, prepare a checklist that xyz stocks are fulfilling the required condition by ticking the checklist box and accordingly rank your stocks in descending order and finalise your perfect fundamentally strong stocks for your investment. Now the question arises what points we have to cover in the checklist to eliminate fundamentally weak stocks. So here are the points of our checklist, first is intrinsic value of share, pe value, book value, dividend yield, what is market capitalisation and what is promoter shareholding pattern and some more other points. We will discuss every checklist point in detail. There are various website available for example screener, Google finance, MSN money, Yahoo finance etc that provides you above fundamental details some of them are free and some of are paid but it is your intelligence but to analyse the correct ratio the correct value of particular share.For this you have to understand the real definition the real meaning of this terms so let’s begin with the our first term intrinsic value. Before moving ahead I have one tip for you: prepare a notebook list out the stock for which you want to invest or else prepare a checklist as we are discussing and record it regularly on a regular time frame weekly basis or as per your convenience but make sure that you should be consistent.The way of discussing our approach is logical and then with formula as a result you can learn the definition thoroughly and you can implement your strategy very effectively also it can help to calculate your risk vs reward ratio smoothly
The way of discussing our approach is logical and then with formula as a result you can learn the definition thoroughly and you can implement your strategy very effectively also it can help to calculate your risk vs reward ratio smoothly.
Simple Ways to Understand Intrinsic Value for Beginners
Have you ever gone to a supermarket and found that two product A & B say cookie or biscuit have same ingredient, same test, same weight but have different price one with higher price and one with lower price what decision you will take whether you will buy the product with high price or low price if your answer is for second one B then congratulation you understand the term intrinsic value. And if we add one more cookie product C which is same but prices less than the second one B then what is your answer if you go for third cookie C if yes then congratulation again you understand the term undervalued and overvalued now it is your task to comment which cookie A, B, C is undervalued and which cookies is overvalued
Theoretically the definition of intrinsic value is : The intrinsic value of a share represents its estimated true worth, determined through financial analysis rather than just the current market price. It’s an estimate of what the share is worth based on the company’s fundamentals, like earnings, growth, and assets, and it helps investors assess if a stock is overvalued or undervalued.
From this definition it is clear that the exact and correct value of a particular share is intrinsic value; sometimes it is overvalued and sometimes opposite i.e., undervalued. So come back to the our previous example of cookie in one case we have a profit and and in one case we have a loss same scenario is applicable on stock also if you understand the correct value of any share you can make the good amount of profit or opposite if you don’t know the correct value of any share so what methods are there to find out the intrinsic value of any share majorly three methods are there first asset based valuation, second P/E ratio analysis and third though discounted cash flow analysis
Common Questions About Market Capitalisation Explained
Take a scenario that A company has 100000 share price and another company B has 1000 share price. What do you think which company is the bigger one if I say that A company has a total 100 shares listed and B companies has total of 10 thousands shares listed. Actually both a and b company are equal in size irrespective which company has high share price accordingly you understand what is market capitalisation it is nothing but current share price multiply by total number of shares generally market capitalisation is categorised into three parts first large size, mid size and small size.
