Step 9.Otsenka Business

Step 9.Otsenka Business

"Reconnaissance in force - a common tactic in the stock market. Debrief market participants, and you'll probably find that most people are very poorly understood or not understood at all what they make their first investments." - You Have More Than You Think
Note that this step is entitled "Evaluation of business" and not "Estimation of shares." Although the process of investment research is most often formulated as the valuation of shares, educated investors know thatbuying stock, you actually get a share of the business. Therefore, to calculate how much a stock, you first need to determine how much a business as a whole. You can start this process with an assessment of financial performance in terms of value per share, to calculate what is the proportion of the business.
If you own one share of Wal-Mart, you, along with members of the family of the founder of the company Sam Walton (Sam Walton), a business owner. Of course, the family of Waltons own more than you. Much more. But, nevertheless, your stock is also considered. When it comes to the need to take serious decisions, they will send you a ballot and will take into account your voice. And every time a customer purchases a mask for snorkeling, a stereo or a set of towels in the store Wal-Mart, a tiny fraction of profits that makes this purchase belongs to you. Very, very small percentage. But you should not oppress it, in fact at Wal-Mart is very, very many buyers.
The fate of each share is inextricably linked with the fate of this business and with the ratio of market to the future prospects of this business.
It all comes down to price and quality
As soon as you learn more about how to study the company, you will see more and more different measures and tools that investors use for evaluation. These tools may include price / earnings, earnings per share estimates based on cash flow and so on. At first, all these tools to assess your business head can form a large dump. However, it is better if you eventually rassortiruete into two main categories: price and quality. There are also two basic questions that you need to answer before deciding whether or not the company of your investment:
1) Is it a strong and growing high-quality company?
2) Is the price of the shares of the company's attractive right now?
If you do not bother to answer these questions (no matter how much they may be), you can purchase as a result of extremely overvalued shares outstanding of the company or a very low price to be the owner of the share of the business, which runs the risk of fall by half as soon as possible.
Quality
There are several ways by which you can determine the quality of the company. Whether it is free from debts or ears stuck as a percentage of loans? Are there many companies cash? Whether it generates large cash flows and effectively disposes of whether the money? Does growing sales and profits with commendable speed? Grow as the norms of a gross, operating and net profit? Is it reasonable to the company, and whether it does its job? It is well-positioned company is to cope with their competitors? Whether the company owns a well-known and loved brand?
This is - just a few of the many indicators by which you can evaluate the quality of your chosen company.
Price
Determining the price of the company, you do not have to wonder how many dollars worth one share of the company. Instead, you must compare the magnitude of a rate per share with a certain standard. Investors usually take a set of indicators and compare them with the profit of the company. Price / earnings ratios, for example, compares the stock price with earnings per share. Some companies may not be adequately evaluated on the basis of their profits, and in this case is often used to value sales. Another relationship, built on the profit rate is the ratio of price / earnings to growth rate of profits.
The share price of the company, in fact, is a reflection of expected profits, discounted at the appropriate rate. If your calculations show that the sum of discounted profits of the company shall be expressed in the value of the shares at $ 80, but now this stock is selling at $ 60, you are likely to have a chance to make a good profit.
Value
Once you have made of the quality of the company and its price, you can begin to speculate on what should be the intrinsic value of the company. Before we go any further, you should remember that there are many different investment styles and many different ways to evaluate stocks. Some investors focus their attention primarily on finding undervalued companies, paying particular attention to the stock price. Others take into account the price, but more focused on quality business. Both approaches are valid.
It would be wrong simply to look out for rapidly growing companies, regardless of price and quality of business. Or just explore the movement of stock charts and volumes of trades.
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Success in the analysis of individual businesses and investing in them their money is to buy those companies in which you best understand, and to continually improve and supplement their knowledge about these companies.
Here are some steps that you take would be useful to broaden their knowledge:
• Try any of the products or services. Explore how the company improves its product or service and what they demand.
• Read about the company. Find books, magazines and newspapers, which contained articles about this company.
• Poizuchayte discussion board, where we are talking about companies that interest you. You can and should ask questions about them. In particular, look under "Frequently Asked Questions" (FAQ), which is linked to the bottom of most of the discussion boards.
• Find out which model is the company's business. As it makes its money? How is it organized? As a business model might change a few years? On what assumptions a model?
• Examine the company's competitive environment. Who are its main competitors? Whether the company succeeds in repelling the attacks of competition? What advantages the company has over their competitors? What are its shortcomings in comparison with them? How does the industry to which the company's activities and what problems can stand in front of her in connection with possible changes?
• Think about the risks encountered by the company. In the registration documents submitted to the Securities and Exchange Commission, the company explains some of the risks that it sees itself.
• Consider some numerical indicators. Find out how to quickly grow sales. Calculate the ratio of debt per share. Determine rate of gross profit.
• Talk to people involved in this business (the company's employees, suppliers, buyers shop, where the company sells its products, the company's customers, people familiar with the company's competitors, etc.). Find out what they view on the company and its place in the industry. Find out what they think about the prospects of study you company.
It may seem that all is not easy to reconcile. But remember that all our teaching and heading for the designed to help investors understand and link together all the knowledge necessary for effective investment. If you want to see a portfolio, compiled on the basis of careful study and evaluate companies before they made an attachment, please go to "Step 10".