The purpose of the Discounted Cash Flow (DCF) method is to find the sum of the future cash flow of the business and discount it back to a present value. I use the F Wall Street method of valuing a business along with some tweaks here and there to suit my tastes. The advantage of this method is that it requires the investor to think about the stock as a business and analyse its cash flow rather than earnings. The first and foremost reason a business exists is to make money where money = cash, not earnings. Since cash is what a business needs in order to maintain and grow its operations, it's only right to consider the possibility of its future cash growth rather than earnings growth.
Continue reading...Monday, November 24, 2008
In 1932 at the bottom of the Great Crash, Ben Graham's fund had dropped 70%, but it was precisely this time when he wrote an article on Forbes about the cheapness of the market and how the market was selling the United States for free. I feel we are close to the same situation. Deep Value Companies Stock Market Prognosticator previously shared a list of Net Current Asset Value plays, and I previously wrote about how there were literally hundreds of companies that are being quoted for less than their cash in the piggy bank. One such company that I have analyzed lately is ValueVision Media Inc. These companies are being quoted in the market for much less than their liquidating value, as if they were all destined to be doomed. But does it make sense to be quoted for less than the cash in your hand?
Continue reading...Wednesday, November 19, 2008
Until Nov 21, you have access to all the premium content on Morningstar. Quickly sign up (no credit card required) or log in now! Go go go. Thanks to Contrarian Value Investing for the notice. I've also made a quick comparison between Morningstar fair value and my fair values.
Continue reading...Wednesday, July 30, 2008
I've been looking into a company by the name of GeoEye after reading up on the very detailed and well written analysis by Chris Fernandez of Peak Stocks. If you are interested in small caps and don't believe stock price volatility is a correlated indicator of business performance, then you can read more of his work by going here. Before you read on, keep in mind that I am in the initial phases of poking around and nothing should be taken as granted. However, I plan to complete my research by August 22. Continue on to find out why.
Continue reading...Friday, July 18, 2008
Fiscal year 2008 came to a close for AeroGrow on March 31, 2008. The conference call was held on June 26 and I think it is a good time to provide an update. Previously I had written about AeroGrow and pointed out good and bad points, but mostly good. With the stock price lower by approximately 35% from my time of purchase.In this post, I won't gloss over the increase in revenue or store presence and other obvious matters. This post, I'll be going over the problems.
Continue reading...Tuesday, July 15, 2008
With increasing prices in food, commodities and inflation, I have decided to distribute the spreadsheets via an alternative method. The spreadsheets have now been split into a basic and premium version. The basic spreadsheets are the free versions which now only contain the financial statements and a valuation page. After using it, I hope that users will want to upgrade to the premium version.
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Sunday, December 14, 2008
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