I did some serious study this weekend and came across a few
great articles about how to value a stock and how to know when a stock is
undervalued and is “on sale.”
It is important to be aware of overall market conditions
that will bring stocks down to discount levels.
With that said regardless of market conditions if a stock is cheap then
eventually people will buy it. That is
the case with a few stocks that I checked out this weekend.
Before I post my list I want to give the reasoning behind
the list so these picks will make sense.
I read several articles that talked about how to value stocks. They all had good approaches and formulas:
This last one however had a more comprehensive formula that
just made sense in how to value a company’s stock. If you take what a company is worth right now
if it was going to be sold you would have a good indication of its value. That formula would take into account the
assets minus the liabilities, available stock, and future earnings growth. This will give you what the stock price
should be trading at based on the value of the company. If you compare that to what the actual price
is you can find some seriously undervalued stocks (and some seriously
overvalued ones too). This method will
also help you determine a target price to take profits.
I added another component to this method to further refine
the stock picks. This was to look at the
analyst reports on Yahoo Finance to come up with a professional opinion of the target
price for the stock. I look at the high,
low and mean target price based on 20-30 analysts opinions and compare that to
where the stock is currently trading.
By calculating the sell-now value of the stock and the
analyst target price I can see if a stock is undervalued or not and also set my
“take-profit” price.
With that said here are my stock picks for this week (they
are not in any particular order):
CMCSA
Trading at 31.36 according to the formula, the value of the
company is 54.33
The mean analyst target price is 34.6 (high 41, low 31)
TGT
Trading at 58.07 according to the formula, the value of the
company is 112.51
The mean analyst target price is 63.67 (high 69, low 54)
MSFT
Trading at 30.18 according to the formula, the value of the
company is 61.97
The mean analyst target price is 35.69 (high 40, low 29)
INTC
Trading at 26.16 according to the formula, the value of the
company is 60.58
The mean analyst target price is 29.41 (high 35, low 19)
CAT
Trading at 84.61 according to the formula, the value of the
company is 182.3
The mean analyst target price 124.68 (high 142, low 95)
WMT
Trading at 71.36 according to the formula, the value of the
company is 113.99
The mean analyst target price is 67.39 (high 79, low 55)
Although these prices are based on the actual “sell-now”
value of the company, you have to take into consideration the current market
conditions and any news coming out about the company. In short...Do your homework.
P.S… If you donate $5 ...I will send you the Excel Spreadsheet
with the Stock Valuation Calculator plus the list of 25 stocks that I
studied. Also included on my spreadsheet
is a list of 37 companies that pay the best dividends.
Thanks for viewing my blog!
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