Wednesday, March 17, 2010

How to Value Stocks?

1) Read a Balance Sheet:

2) Understand the fundamentals about the company’s business to value its shares

3) Learn to use Earnings, Revenues, Cash flow, Equity, dividend yield and subscribers to figure out how much a company is worth.

4) Return on Equity stands as a crucial weapon in the investor’s arsenal if understood properly.

5) ROE encompasses 3 main levers by which management pokes and prods the corporation – profitability, asset management and financial leverage.


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