 Did you stock market overacted this enitre week? |
especially tech stock are dropping like it's hot..
don't people remember all the great earnings reported just a week ago or two?
but one not as expected earning from ... |
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 Stock market? |
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 KISS Method for currency trading? |
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 If I were to buy 10,000,000 shares of stock vauled at .0001 a share, how much did I make if it raised to 0.69? |
So thats Basically $1000 for 10,000,000 shares of stock. and the value jumped to $0.69 from $.0001.
Additional Details
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Jake K | How do you know if a company's shareprice is overvalued.? |
Also, what are some indicators that a stock is a good buy? |
 |
 
derobake
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You look at the valuations of a company and its stock. There are a few key ratios that help you determine how "expensive" a stock is. The Price to Earnings (PE) ratio is the most commonly used. This is the price per share divided by the earnings of the company per share. Another ratio is the Price to Book ratio which compares the share price to the amount of equity (the "book value") of a company on it's balance sheet.
Chapter 14 of my free downloadable book at http://www.invest-for-retirement.com goes over the basics of fundamental analysis and a few key ratios. It also talks about the limitations of depending on these ratios to determine if a stock is a good buy or not.
Despite all it's logical merit, fundamental analysis is flawed in the long run because of two key problems:
- The introduction of random events cannot be predicted and will throw off the estimations of value. And even if a random event does not happen directly to your company, if something bad happens to another company that interacts with your company, then you company will still be affected.
- Short-term trends cannot necessarily be extrapolated into long-term trends. Numerous studies have shown that high growth of a company is only sustained for about 3 - 5 years, and then it reverts to average growth thereafter. So, if investors are assuming that recent high growth will continue over the next decade or so, they may inadvertently assume higher earnings than is reasonable and then "justify" a higher price than what is reasonable. |
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Retired
 |
That's a question that would take a lot longer to explain then I know I want to spend on it. (Real Basic) A stock is over priced when the value of all the outstanding stock is greater then the net worth of the company. Indicators of a good buy is when, in the foreseeable future a higher profit then projected will be realized. |
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The Red One
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You want to look at a few things. The first thing I look at are the fundamentals of the company (Income Statement, Balance Sheet, Cash Flow).
- Make sure their net income is rising
- Make sure they have enough money to cover any debt they have (lower the debt the better!)
- See if cashflow is rising
If everything in that area seems to line up, I look at the upcoming growth of the company.
- Check to see if the company has been beating earnings (always a good sign)
- Check the growth for the next 5 years. (+20-25% growth is considered a fast grower)
After you look at the growth of the company and are still interested, you must look at the companies competitors.
- Compare their p/e ratio (Price to Earnings)
- Compare their peg ratio (Price to Earnings over 5 year growth)
- Compare quarterly revenue growth
Sometimes I can find a company with a better value by looking at the competition, so be on the look out.
For a company that's overvalued - you want to concentrate of their competition and see whether their numbers (p/e, peg, rev growth) are weaker then their competitors.
There are a lot of other tricks I like to use, but I will probably confuse you. I suggest reading 'One up on Wall St.' by Peter Lynch. Very well written book. It will teach you a good amount. Have fun! |
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Wai Meng Y
 |
Depends on what philosophy you subscribe to. Some think the PE ratio is a good indicator (when compared to an industry's PE) of whether a stock is undervalued or overvalued.
Some based on the NAV (net asset value) of the stock i.e. the actual assets per share. Some based on the number of projects the company will handle in the near future i.e. contracts to be carried out in the next two to three years.
Others look at the growth potential of the company, and some look at the management itself. If a member of the senior management leaves, it may mean there's no longer any value to the company.
There are also some who look at insider trading to see who are trading, and how much they buy/sell. And of course, some are technical chartists who look at trends in share prices. |
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jfrfvr4
 |
The first thing you can do is take P/E as a valuation and throw it out the window.It's the worst way to value for so many reasons that I care not to type them all here.The link below will give you a better idea. |
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shamieya
 |
The P/E Multiple should reflect value. a "High" and "low" P/E multiple is relative, but generally over 20 is expensive. However this mutiple must be compared to the growth rate. If the growth rate is more than the P/E multiple, you got a deal. Companies that have consistent growth and healthy financials will always be your best bet. This also depends on your investment strategy. You want stocks with the chance for high appreciation or stocks that pay great dividends or both? |
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Suzy
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The price to earnings ratio is a good indicator. |
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Frank Castle
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If the P/E (Price/Earnings) is three digits long then it's overvalued. |
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