Stock Valuation Tools
You come across a stock ticker or hear about a stock and you would like to know if the stock is a good buy.
The first thing I would do is go to https://finviz.com website. Finviz gives a quick 30 seconds view of a given stock. It also has a good screener to filter stocks based on investment criteria that you are comfortable with and that fits your investing style. You don't need to create an account to pull up a given stock. However, you would need to create an account if you want to create a portfolio or create a screener. You can also view the latest headlines about the company, stocktwits to the right and scrolling down further, you can view the recent insider transactions as well. What finviz doesn't give you is the last 10 years performance, financials, key ratios etc. Once you look at a given stock in finviz and are satisfied with key metrics that matter to you, the next step is to go for detailed analysis.
The best website that is out there for detailed analysis of any stock is www.morningstar.com. You enter the ticker at the top in the search field and it will show you very detailed analysis of the stock. The information is organized into multiple tabs. "key ratios" tab contains the last 10-year performance metrics. "Financials" tab contains the balance sheet, cash flow and income statements. "Valuation" tab contains the valuation relative to the market and also valuation based off of future earnings. After the detailed analysis of the stock using historical metrics, the next step is to determine the intrinsic or fair value of the stock.
There are two different methods to calculate the intrinsic business value or fair value of the stock. One of the two methods, DCF (Discounted Cash Flow) is the method that I most commonly use to calculate the fair value. You can get the calculated DCF value from either www.gurufocus.com or www.buffettsbooks.com.
Enter the stock ticker symbol in the top left corner of guru focus web page and it will bring up all the information about the stock in multiple tabs. Click on DCF tab and you will see the Fair value and also the margin of safety relative to the market price. Make a note though that gurufoucs puts a ceiling of 20% for growth rate if the company was growing faster than 20% in the last 10 years. Similarly, it puts a floor of 5% for growth rate if the company was growing at slower than 5% in the last 10 years.
Buffettsbooks doesn't have the level of automation present in guru focus. You would have to enter the values manually to calculate the intrinsic business value. I tried both these sites for multiple stocks and the fair value that they arrive at is almost identical. So, you can safely use guru focus alone. However, buffettsbooks is a very good site to understand about value investing. My foray into value investing started with this about a year ago or so. I really recommend anyone interested in value investing to spend time and go thru all the tutorials at buffettsbooks. Trust me, it is immensely helpful.
I didn't go into much detail on the specific metrics to look for in evaluating the stock on each of these websites. That would be for another blog post. Meanwhile, play around with various stocks that you are familiar with on these sites and get a feel for it.
The first thing I would do is go to https://finviz.com website. Finviz gives a quick 30 seconds view of a given stock. It also has a good screener to filter stocks based on investment criteria that you are comfortable with and that fits your investing style. You don't need to create an account to pull up a given stock. However, you would need to create an account if you want to create a portfolio or create a screener. You can also view the latest headlines about the company, stocktwits to the right and scrolling down further, you can view the recent insider transactions as well. What finviz doesn't give you is the last 10 years performance, financials, key ratios etc. Once you look at a given stock in finviz and are satisfied with key metrics that matter to you, the next step is to go for detailed analysis.
The best website that is out there for detailed analysis of any stock is www.morningstar.com. You enter the ticker at the top in the search field and it will show you very detailed analysis of the stock. The information is organized into multiple tabs. "key ratios" tab contains the last 10-year performance metrics. "Financials" tab contains the balance sheet, cash flow and income statements. "Valuation" tab contains the valuation relative to the market and also valuation based off of future earnings. After the detailed analysis of the stock using historical metrics, the next step is to determine the intrinsic or fair value of the stock.
There are two different methods to calculate the intrinsic business value or fair value of the stock. One of the two methods, DCF (Discounted Cash Flow) is the method that I most commonly use to calculate the fair value. You can get the calculated DCF value from either www.gurufocus.com or www.buffettsbooks.com.
Enter the stock ticker symbol in the top left corner of guru focus web page and it will bring up all the information about the stock in multiple tabs. Click on DCF tab and you will see the Fair value and also the margin of safety relative to the market price. Make a note though that gurufoucs puts a ceiling of 20% for growth rate if the company was growing faster than 20% in the last 10 years. Similarly, it puts a floor of 5% for growth rate if the company was growing at slower than 5% in the last 10 years.
Buffettsbooks doesn't have the level of automation present in guru focus. You would have to enter the values manually to calculate the intrinsic business value. I tried both these sites for multiple stocks and the fair value that they arrive at is almost identical. So, you can safely use guru focus alone. However, buffettsbooks is a very good site to understand about value investing. My foray into value investing started with this about a year ago or so. I really recommend anyone interested in value investing to spend time and go thru all the tutorials at buffettsbooks. Trust me, it is immensely helpful.
I didn't go into much detail on the specific metrics to look for in evaluating the stock on each of these websites. That would be for another blog post. Meanwhile, play around with various stocks that you are familiar with on these sites and get a feel for it.
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