Value Investment is a Risk-Averse Approach

Conclusion
Fundamental Analysis is a structured and formal approach to research on a stock's value and its potential growth. This analytical procedure facilitates the identification of overvalued and undervalued stocks relative to their earnings potential, dividend income potential and to their asset values, against the backdrop of the economic and industry environment. On the basis of the research, investment decisions are made such that the odds are stacked in favour of the Fundamental Analyst.


FINDING INFORMATION
- There are various sources of information. The most accessible are:

- The company’s annual report

- SGX’s Pulses Magazine

- The Company’s Website

- ShareInvestor.com

- Yahoo.com

- Reuters.com

- Bloomberg.com

- Your friendly stockbroker’s research report



EVALUATING THE INFORMATION

Cash flow Evaluation – this indicates the long-term viability of a business

- Profit Growth. Can the company and its business grow revenue (sunset, star, Porter’s model)

- Managing debt and expenses e.g., Keppel Corp manages its debt well and SIA its expenses.

- Value Investing. Undervalued situations use discount to book value where share price is compared to the stock’s intrinsic value

- Cash Cow. Look for cash generating companies, and dividend policy, eg Haw Par Healthcare, SPH, Chuan Hup, SembMarine, Keppel Corp

- Management, governance, execution, good and poor (foul-up)



PER SHARE VALUATION

Often, analysts and fund managers look at stock valuation. The most common terms used are :

- Earnings per share or EPS

- Price to earnings ratio or PER

- Price earnings ratio to growth or PEG

- Net tangible asset per share or NTA

- Dividend per share or DPS

- Dividend yield per share or DPS/price



http://www.sias.org.sg/beginnerguide/03_02_Fundamental_Analysis.html

Bullbear Stock Investing Notes