The Investor Sentiment - Equity and investments forum for Sri Lankans
Search
 
 

Display results as :
 


Rechercher Advanced Search

Latest topics
» CSE Media Release: Constituent Changes to the S&P Sri Lanka 20 Index
Today at 3:40 pm by Rana

» Booze Calculator
Today at 3:31 pm by කිත්සිරි ද සිල්වා

» Things we are not aware of-Sri Lanka politics.
Today at 1:59 pm by කිත්සිරි ද සිල්වා

» S&P upgrades DFCC Bank’s rating outlook from Negative to Stable
Today at 12:13 pm by CK

» PB. N0000 (People's Bank)
Today at 10:54 am by yellow knife

» Plantations - Analysis by Saliya
Yesterday at 11:31 am by lanka

» ඇලබාමා මැතිවරණයෙන් ඩොනල්ඩ් ට්‍රම්ප්ට පරාජයක්
Wed Dec 13, 2017 5:17 pm by Ethical Trader

» දිවියෙන් සමුගැනීම සමරන්න සාදයක්!
Wed Dec 13, 2017 5:12 pm by Ethical Trader

» පැසිෆික් 'ළදරු දූපත' අඟහරු හඳුනාගැනීමට මගක්
Tue Dec 12, 2017 8:12 pm by CK

» Best combination in Sinhala music: Prem+Victor
Tue Dec 12, 2017 3:49 pm by CK

» JKH trades in a tight channal
Tue Dec 12, 2017 12:09 pm by lanka

» Sri Lanka to push ahead with shipping liberalization
Tue Dec 12, 2017 10:13 am by Ethical Trader

» Investment in listed companies.
Tue Dec 12, 2017 8:45 am by Ethical Trader

» TPL.N0000 (TALAWAKALE PLANTATIONS )
Sun Dec 10, 2017 6:59 pm by කිත්සිරි ද සිල්වා

» Trading
Sat Dec 09, 2017 7:42 pm by The Alchemist

» In the Meantime, Within Our Shores !
Sat Dec 09, 2017 5:39 pm by Ethical Trader

» ඩොලර් මිලියන 251.4 ක IMF තෙවන ණය වාරිකය අනුමතයි
Fri Dec 08, 2017 5:13 pm by Ethical Trader

» IMF approves US$ 251.4 mn to Lanka
Fri Dec 08, 2017 5:11 pm by Ethical Trader

» Strong uptick in exports, FDI
Fri Dec 08, 2017 12:09 pm by Ethical Trader

» Sri Lanka needs more taxes to cover SOE losses,
Fri Dec 08, 2017 12:04 pm by Ethical Trader

» ජෙරුසලමේ තත්ත්වය : ට්‍රම්ප් පියවරට එරෙහිව පලස්තීනුවෝ වීථි බසිති
Fri Dec 08, 2017 11:56 am by Ethical Trader

» Far reaching new Securities Exchange Bill gazetted
Thu Dec 07, 2017 5:39 pm by Ethical Trader

» Is he an Aladdin with a magic lamp
Thu Dec 07, 2017 5:37 pm by Ethical Trader

» CMEC to build 400 MW natural gas power plant in Sri Lanka
Thu Dec 07, 2017 5:35 pm by Ethical Trader

» Cabinet approves signing of share ownership agreement on Hambantota Port
Thu Dec 07, 2017 5:35 pm by Ethical Trader

» ශ‍්‍රී ලංකාව ලෝකයේ දූෂිතම රටවල් හතර තුලට වැටේ..
Thu Dec 07, 2017 5:31 pm by Ethical Trader

» හම්බන්තොට වරාය චීනයට බාර දීම 09 වෙනිදා
Thu Dec 07, 2017 12:50 pm by Ethical Trader

» Dividend Announcement
Tue Dec 05, 2017 5:06 pm by Ethical Trader

» පළාත් පාලන ඡන්දයේ ඇස්තමේන්තු ගත වියදම බිලියන 3 ඉක්මවයි
Tue Dec 05, 2017 2:31 pm by guruji

» ඉන්දියා යාමට ගිය ක්‍රීඩකයන් ගුවන්තොටේදී යළි කැඳවේ
Tue Dec 05, 2017 2:21 pm by Ethical Trader

» උතුරු කොරියානු මිසයිලය : ගුවනේදී "කැතේ පැසිෆික් කාර්ය මණ්ඩලය දුටුවා""
Tue Dec 05, 2017 2:17 pm by Ethical Trader

» මෙක්සිකෝවේ "කොලපැහැ රත්‍රන්" රකින "අලිගැටපේර පොලිසිය"
Tue Dec 05, 2017 2:06 pm by Ethical Trader

» ජෙට්වින්ග් කොටස් වෙළෙඳපොළ සම්ප්‍රාප්තියට දින නියම වෙයි
Mon Dec 04, 2017 1:14 pm by nihal123

» Flying is the Safest mode of Transport
Sun Dec 03, 2017 9:08 am by කිත්සිරි ද සිල්වා

» කෙලවලු පැටවුන් අල්ලන්න එපා: ධීවරයන්ට අවවාදයක්
Fri Dec 01, 2017 7:40 pm by කිත්සිරි ද සිල්වා

» එජාප මන්ත්‍රීවරුන්ට ජනාධිපති විවේචනය කිරීම තහනම්
Fri Dec 01, 2017 11:58 am by Ethical Trader

» හිමගිර පාමුළ විමුක්තිය සොයන බෞද්ධ භික්ෂුණින් වහන්සේ
Fri Dec 01, 2017 11:47 am by Ethical Trader

» දකුණු කොරියාව: ජනපති මෛත්‍රීට අනපේක්ෂිත අමුත්තෙක් මුණගැසෙයි
Fri Dec 01, 2017 11:36 am by Ethical Trader

» Laughter the Best Medicine
Thu Nov 30, 2017 6:08 pm by කිත්සිරි ද සිල්වා

» ඒකාබද්ධ විපක්ෂය සමග සාකච්ඡා අසාර්ථකයි: ශ්‍රීලනිපයට "ජයග්‍රහණය විශ්වාසයි"
Thu Nov 30, 2017 4:12 pm by Ethical Trader

» සීමා නීර්ණ ගැසට් පත්‍රය අවලංගු කළ පෙත්සම ඉවතට
Thu Nov 30, 2017 4:08 pm by Ethical Trader

» අයහපත් කාලගුණය: මරණ සංඛ්‍යාව ඉහළට
Thu Nov 30, 2017 3:57 pm by Ethical Trader

» "උතුරු කොරියාව නව බැලිස්ටික් මිසයිලයක් විදලා" - දකුණු කොරියාව
Wed Nov 29, 2017 1:01 pm by Ethical Trader

» Govt. to release 50 acres of capital land for investments
Tue Nov 28, 2017 11:32 am by කිත්සිරි ද සිල්වා

» Higher oil bill overshadows strong growth in exports
Tue Nov 28, 2017 11:12 am by Backstage

» නැනෝ ඉලෙක්ට්‍රික් හෙට සිට වෙළෙඳපොළේ – එක් ආරෝපණයකින් කිලෝමීටර 200 ක ධාවනයක්
Mon Nov 27, 2017 5:43 pm by Ethical Trader

» Deadly earthquakes could hit a billion people next year
Mon Nov 27, 2017 10:40 am by Backstage

» Only Sri Lanka’s top five stockbrokers profitable
Mon Nov 27, 2017 10:22 am by Backstage

» Brush manufacturer BPPL faced tough six months
Mon Nov 27, 2017 10:17 am by Backstage

» Sri Lanka's got Talent
Sun Nov 26, 2017 11:33 pm by sashimaal

December 2017
SunMonTueWedThuFriSat
     12
3456789
10111213141516
17181920212223
24252627282930
31      

Calendar Calendar

Disclaimer


Information posted in this forum are entirely of the respective members' personal views. The views posted on this open online forum of contributors do not constitute a recommendation buy or sell. The site nor the connected parties will be responsible for the posts posted on the forum and will take best possible action to remove any unlawful or inappropriate posts.
All rights to articles of value authored by members posted on the forum belong to the respective authors. Re-using without the consent of the authors is prohibited. Due credit with links to original source should be given when quoting content from the forum.
This is an educational portal and not one that gives recommendations. Please obtain investment advises from a Registered Investment Advisor through a stock broker

How to Find Undervalued Stocks and Turn a Large Profit

View previous topic View next topic Go down

How to Find Undervalued Stocks and Turn a Large Profit

Post by nihal123 on Wed Nov 01, 2017 10:37 pm

There are many competing investment theories about how to find the “best” investments based on your time frame, risk tolerance and specific objectives. One approach, dating back at least to Benjamin Graham’s 1949 book, The Intelligent Investor, is to identify “undervalued stocks” that for one reason or another are selling at prices far below their underlying values.

Undervalued Stock Indicators
But how can you identify undervalued stocks? There are six criteria investors look for:

Low price/earnings ratio.
No discussion of stock prices would be complete without referencing one of the most common, but not always the best, measures of a stock’s relative value: the price/earnings (P/E) ratio. Every company has a P/E. The higher the P/E, the higher the price of the stock relative to the earnings (profit). While a relatively low P/E ratio may indicate a buying opportunity, it’s important to remember there is likely a reason for the low P/E. For example, a company might report high earnings, but professional investors, who follow the business closely, know the company isn’t telling the whole truth. As a result, the stock price will remain low and the P/E ratio will look appealing. These scenarios are rare, however, so you should be OK to rely on the P/E ratio to find deals.

Lagging relative price performance.
If a company’s share price is lower than those of its industry peers, this may reveal an underperformance situation. This could happen for several reasons. One example is if stock analysts show concern over certain financial metrics (like the ones listed below). It’s not unusual for a single voice on CNBC or in The Wall Street Journal to cause a whiplash effect as investors sell off and drive the price down. What happens is investors drive the price too far down, to the point of making the stock price undervalued. In the screener you use, there will be an option to compare individual stock price histories over various periods of time against other individual stocks and against stock indexes.

Low price/earnings growth ratio.
The price/earnings growth (PEG) ratio is considered more accurate than just a company’s P/E alone. When you’re looking at a stock, take the P/E ratio and divide by the “earnings growth rate.” If the ratio is less than 1 (e.g., a P/E of 10 and projected growth of 15%, giving us a PEG ratio of 0.66), investors may be giving more weight to past performance than to future growth opportunities. Be aware that growth projections are just that, however: projections.

High dividend yield.
Bet you didn’t think to look at the dividend yield, did you? But actually, if a company’s dividend payment rate exceeds that of their competitors, this may indicate that the share price has dipped to “undervalued” status (in relation to its dividend payment). If the company is not financially troubled and future dividend payments appear secure, the dividend opportunity can provide returns in the short term, as well as potential for the stock price to move higher in the future. If you’re using a stock screener (see below), use the “dividend yield %” to find undervalued stocks in a given industry.

Low market-to-book ratio.
A company that has a low market value (total market capitalization) as a ratio to book value (total shareholder equity) may present an undervaluation situation. The key is understanding the real value of both tangible assets (land, buildings, cash) and intangible assets (goodwill, intellectual property). For example, a company that produces and sells toys might also own property. The value of the property the company owns could potentially be worth more than the toy business it operates. Investors might overlook this and the price of a stock will not reflect the underlying value of assets the toy company has on the books.

Free cash flow.
Many investors put less emphasis on reported profit and more on free cash flow — the amount of cash generated by the business after all expenses are accounted for. A stock that appears low-priced because of lower reported earnings may be a great deal in terms of cash flow. You can find this from inside a screener or through your brokerage firm by looking for the cash/share ratio. It can be fascinating to see how two apple-to-apple companies differ in terms of cash on the books.

These metrics aren’t the be-all-end-all to determine if a stock is a good value. No single metric or measure can ensure an investor that a potential investment is undervalued. If several of these seem to be confirming an undervaluation situation, however, you may have identified a market inefficiency that is a good investment opportunity.

Tools for Finding Undervalued Stocks

These days, there are free online tools that provide investors with the ability to search and screen investment ideas within seconds. You can start with a stock screener, such as Google Stock Screener or Yahoo Stock Screener. If you want more in-depth search capabilities and don’t mind paying a few bucks, you can use YCharts’ Stock Screener. With a subscription to YCharts, you’ll also get access to many other investing tools.

https://finance.google.com/finance/stockscreener

https://finance.yahoo.com/screener/new



Or if you have a brokerage account, I’d recommend using its screeners. What these tools do is analyze the financial metrics of thousands of companies and deliver to you the ones that meet your input. For example, if you input “P/E must be lower than 15,” the screeners will not show you any companies with P/E ratios higher than 15.

https://investorjunkie.com/52351/find-undervalued-stocks/
avatar
nihal123
Top contributor
Top contributor

Posts : 4242
Join date : 2014-02-24
Age : 51
Location : Waga

Back to top Go down

Re: How to Find Undervalued Stocks and Turn a Large Profit

Post by Ethical Trader on Thu Nov 02, 2017 12:08 pm

Thanks Nihal. Its very usefull.
avatar
Ethical Trader
Top contributor
Top contributor

Posts : 3072
Join date : 2014-02-28

Back to top Go down

Re: How to Find Undervalued Stocks and Turn a Large Profit

Post by Ethical Trader on Thu Nov 02, 2017 12:25 pm

This link is for CSE stocks. Yahoo or google does not cover CSE.

http://www.mediafire.com/view/prbkigussekmvpy/CSE_Screener_1_4_0.xlsm
avatar
Ethical Trader
Top contributor
Top contributor

Posts : 3072
Join date : 2014-02-28

Back to top Go down

Re: How to Find Undervalued Stocks and Turn a Large Profit

Post by xmart on Fri Nov 03, 2017 8:53 am

thanks ET.

but database outdated. it is not allowing us to update the database.
avatar
xmart
Top contributor
Top contributor

Posts : 573
Join date : 2015-01-17

Back to top Go down

Re: How to Find Undervalued Stocks and Turn a Large Profit

Post by malanp on Fri Nov 03, 2017 9:01 am

Low PE ratio (with the adjusted earning from core business) is the most reliable..

malanp

Posts : 341
Join date : 2014-03-04

Back to top Go down

Re: How to Find Undervalued Stocks and Turn a Large Profit

Post by Ethical Trader on Sat Nov 04, 2017 11:24 am

Yes, its somewhat out dated but I know Dileepa updates it from time to time.
xmart wrote:thanks ET.

but database outdated. it is not allowing us to update the database.
avatar
Ethical Trader
Top contributor
Top contributor

Posts : 3072
Join date : 2014-02-28

Back to top Go down

View previous topic View next topic Back to top


 
Permissions in this forum:
You cannot reply to topics in this forum