Investors need to have several tools in their toolbox when it comes to properly value stocks.
Investors who want to sport market-beating returns must first learn a few valuable skills and be willing to put in a little weekend homework. Arguably, the single most important skill investors can learn is how to value a stock. Without this proficiency, investors are left dancing in the market’s winds without a firm foundation, not knowing if a company’s future growth projections are already baked into the stock price or if a company’s shares are severely undervalued. The very thought makes me shudder!
Almost everything in the financial news media can be classified as unnecessary background noise, but investors must have a way of determining a stock’s true intrinsic value. For that reason, let’s take a closer look at a few tools investors have historically used to value stocks and how you can use them to discover undervalued stocks today.