Keep INVESTING Simple and Safe (KISS)
****Investment Philosophy, Strategy and various Valuation Methods****
The same forces that bring risk into investing in the stock market also make possible the large gains many investors enjoy. It’s true that the fluctuations in the market make for losses as well as gains but if you have a proven strategy and stick with it over the long term you will be a winner!****Warren Buffett: Rule No. 1 - Never lose money. Rule No. 2 - Never forget Rule No. 1.
I have created an excel sheet that could be usefull when calculating Intrinsic values of stocks.
All you have to do is open the excel sheet, and fill in the red numbers in the excel sheet, which you can find on the links next to each box.
Excel will then automatically calculate the intrinsic value of the stock you are analyzing.
Method number one is a very simplistic model, which calculates a price target for the next 5 years based on historical valuations, the last 4 quarters results and future growth.
Method number 2 is more advanced, and takes into account Free cash flow, net cash position and future growth.
This method discounts the future values at a discount rate of 9% per year, which is the return you can expect over the long run in the stock market (7% price appreciation per year + 2% dividend yield per year).
Please be aware that calculating an intrinsic value is not an exact science. It is based on subjective estimates.
The best thing you can do is to use methods used by the biggest value investors in the world, such as Warren buffet, Joel Greenblatt, Monish Pabrai and the likes…