myinvestingnotes.blogspot.my (Bullbear Buffett Stock Investing Notes)

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.

Showing posts with label intrinsic value spreadsheet. Show all posts

Sunday, 15 April 2012

Intrinsic Value Calculation

Inputs	Default	Input Values (used for calculations)
Your Investment Horizon in Years (Max of 10):	5	5
Most Recent Reported EPS (Earnings Per Share):	#N/A	0.1151
Projected EPS Growth Rate:	#N/A	15.00%
Projected Average Annual PE Ratio:	NA	10
Average Dividend Payout Ratio:	#VALUE!	35%
Desired Minimum Annual Return:	NA	10%
Current Stock Price	NA	$1.40


Calculations
Estimated Earnings Per Share after year 5:	$0.23
Forecasted Stock Price after 5 Years:	$2.32
Total Estimated Dividends for the next 5 Years:	$0.08
Total Estimated Stock Value after 5 Years:	$2.40
Current Share Price:	$1.40
Estimated Intrinsic Value:	$1.49
Estimated Margin of Safety:	-6.27%

-----------------

Inputs	Default	Input Values (used for calculations)
Your Investment Horizon in Years (Max of 10):	5	5
Most Recent Reported EPS (Earnings Per Share):	#N/A	0.1151
Projected EPS Growth Rate:	#N/A	10.00%
Projected Average Annual PE Ratio:	NA	10
Average Dividend Payout Ratio:	#VALUE!	35%
Desired Minimum Annual Return:	NA	15%
Current Stock Price	NA	$1.40

Calculations
Estimated Earnings Per Share after year 5:	$0.19
Forecasted Stock Price after 5 Years:	$1.85
Total Estimated Dividends for the next 5 Years:	$0.06
Total Estimated Stock Value after 5 Years:	$1.92
Current Share Price:	$1.40
Estimated Intrinsic Value:	$0.95
Estimated Margin of Safety:	31.87%

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http://smartstockresearch.com/InvestingBasics/Articles/Stock-Analysis-Spreadsheet.html

More Topics
How To Research A Stock
How To Generate Investing Ideas
What To Know Before You Begin Investing
Why Invest Now?
What Type of Investor are You?
Is Investing in Stocks Like Gambling?
What Does a Stock's Price Tell You?
How To Read a Balance Sheet
How To Read an Income Statement
How To Read a Cash Flow Statement
Why Read the Annual Report?
Should You Be An Investor or Trader?

Online Investing Guide
Where to Learn How To Invest
Online Brokers
Where to Get Stock Ideas
Where to Get Basic Company Information
Where to Get News, Opinions, and Advice
Where to Get Analyst Research
Where to Get Economic Information

Sunday, 26 February 2012

INTRINSIC VALUE: THE RIGHT PRICE TO PAY

INTRINSIC VALUE

Both Warren Buffett and Benjamin Graham talk about the intrinsic value of a business, or a share in it. That is, to buy a business, or a share in it, at a fair price.

But, having regard to the possibility of error in calculating intrinsic value, the careful of investor should provide a margin of error by only buying the business, or shares, at a substantial discount to the intrinsic value.

Buffett is said to look for a 25 per cent discount, but who really knows?

DEFINING INTRINSIC VALUE

Buffett’s concept, in looking at intrinsic value, is that it values what can be taken out of the business.

He has quoted investment guru John Burr Williams who defined value like this:

‘The value of any stock, bond or business today is determined by the cash inflows and outflows – discounted at an appropriate interest rate – that can be expected to occur during the remaining life of the asset.’ – The Theory of Investment Value.

The difference for Buffett in calculating the value of bonds and shares is that the investor knows the eventual price of the bond when it matures but has to guess the price of the share at some future date.

Monday, 17 October 2011

Intrinsic Value Calculator and Spreadsheet Template

http://www.intrinsicvaluecalc.com/

Intrinsic Value Calculator

Value investors actively seek stocks of companies that they believe the market has
undervalued. They believe the market overreacts to good and bad news, resulting
in stock price movements that do not correspond with the company's long-term
fundamentals. The result is an opportunity for value investors to profit by buying
when the price is deflated. (courtesy of Investopedia.com)

Want to estimate the value of a stock? Try this top-rated Intrinsic Value Calculator!

Simply enter your stock symbol and click "Submit" to get started.
Read more about Value Investing

Enter Stock Symbol and click Submit

Enter Stock Symbol Terms of Use

STEP 1:

Input values and click "Calculate Intrinsic Value"

Review Results

Review Results
*Estimated Intrinsic Value Price:*	$
*Estimated Margin of Safety Value Price:*	$
*5-Year Return on Investment Capital (ROIC):* (A strong business will have a 5-Year ROIC of 10% or greater)

Review Technical Chart

View Technical Chart for ; trade on momentum [MACD(17,8,9) and 10-day MA]

Other useful research links:
View Key Statistics for
View Historic Equity Growth (Book Value / Share) for
View Historic EPS and Sales Growth for

How is the Estimated Intrinsic Value calculated?
The software determines an estimated growth rate based on the historic EPS and Equity growth rates. It then applies FV (future value) calculations to determine the expected EPS and stock price at some point in the future. It then reverses the calculation using a minimum acceptable rate of return (15%) to determine the intrinsic value in today’s dollars. The MOS price is half of that estimated intrinsic value price. Value investors
believe that risk can be minimized by only investing when the current price falls below the MOS price.

http://www.valuestockmoves.com/spreadsheetinfo.php

Click to Download this FREE!
Intrinsic Value Excel Spreadsheet Template

(or Right-Click and select 'Save-As')

Calculates the intrinsic value and MOS (margin of safety) for your stocks

Additional notes:

If you’re worried about earnings and earnings growth consistency and want to factor it in somehow, you may want to attenuate growth rates or bump up the discount rate to account for uncertainty.

The keep-it-simple-safe (KISS) approach used by most value investors, including Warren Buffett, is to discount at a relatively high rate, usually higher than the growth rate.

Buffett uses 15 percent as a discount, or “hurdle” rate – investments must clear a 15 percent “hurdle” before clearing the bar. The 15 percent hurdle incorporates a lot of risk, especially in today’s environment of relatively low interest rate and inflation. Conservative value investors usually use discount rates in the 10 to 15 percent range.

Friday, 23 July 2010

Intrinsic Value Excel Spreadsheet Template

http://www.valuestockmoves.com/spreadsheetinfo.php

My 18 points guide to Successfully compounding your money in Stocks

Be a good stock picker.
Think as a business owner.
Always look at value rather than the price. Do the homework.
Buy and hold is alright for selected stocks.
Compounding is your friend, get this to work its magic.
Mr. Market is there to be taken advantage of. Do not be the sucker instead. BFS;STS.
Always buy a lot when the price is low.
Never buy when the stock is overpriced.
It is alright to buy when the selected stock is at a fair price.
Phasing in or dollar cost averaging is safe for such stocks during a downtrend, unless the price is still obviously too high.
Do not time the market for such or any stocks.
By keeping to the above strategy, the returns will be delivered through the growth of the company's business.
So, when do you sell the stock? Almost never, as long as the fundamentals remain sound and the future prospects intact.
The downside risk is protected through only buying when the price is low or fairly priced.
Tactical dynamic asset allocation or rebalancing based on valuation can be employed but this sounds easier than is practical, except in extreme market situations.
Sell urgently when the company business fundamental has deteriorated irreversibly.
You may also wish to sell should the growth of the company has obviously slowed and you can reinvest into another company with greater growth potential of similar quality. However, unlike point 16, you can do so leisurely.
In conclusion, a critical key to successful investing is in your stock picking ability.

http://myinvestingnotes.blogspot.com/2012/07/my-18-points-guide-to-successfully.html

11 Lessons From Peter Lynch

Peter Lynch taught me:

1. Behind every stock is a company. Find out what it’s doing.
2. Never invest in any idea you can’t illustrate with a crayon.
3. Over the short term, there may be no correlation between the success of a company’s operations and the success of its stock. Over the long term, there’s a 100% correlation.
4. Buying stocks without studying the companies is the same as playing poker – and never looking at your cards.
5. Time is on your side when you own shares of superior companies.
6. Owning stock is like having children. Don’t get involved with more than you can handle.
7. When the insiders are buying, it’s a good sign.
8. Unless you’re a short seller, it never pays to be pessimistic.
9. A stock market decline is as predictable as a January blizzard in Colorado. If you’re prepared, it can’t hurt you.
10. Everyone has the brainpower to make money in stocks. Not everyone has the stomach.
11. Nobody can predict interest rates, the future direction of the economy, or the stock market. Dismiss all such forecasts and concentrate on what’s actually happening to the companies in which you’ve invested.

Lynch’s advice had a profound effect on my stock market approach. He taught me that investment success isn’t the result of developing the right macro-economic view or deciding when to jump in or out of the market. Success is about researching companies to identify those that are likely to report positive surprises.

Capital Expenditure

A great company with a Durable Competitive Advantage will have a ratio of Capital Expenditures to Net Income of less than 25%. Less is better.

Capital Expenditures are expenses on:
- fixed assets such as equipment, property, or industrial buildings
- fixing problems with an asset
- preparing an asset to be used in business
- restoring property
- starting new businesses

A good company will have a ratio of Capital Expenditures to Net Income of less than 50%.

A great company with a Durable Competitive Advantage will have a ratio of less than 25%.

Less is better.

Benjamin Graham's 113 Wise Words

The true investor scarcely ever is forced to sell his shares, and at all times he is free to disregard the current price quotation. He need pay attention to it and act upon it only to the extent that it suits his book, and no more. Thus the investor who permits himself to be stampeded or unduly worried by unjustified market declines in his holdings is perversely transforming his basic advantage into a basic disadvantage. That man would be better off if his stocks had no market quotation at all, for he would then be spared the mental anguish caused him by other persons' mistakes of judgement."

Philip Fisher's Wise Words

"The refusal to sell at a loss, while completely natural and normal, is probably one of the most dangerous in which we can indulge ourselves in the entire investment process.

More money has probably been lost by investors holding a stock they really did not want until they could 'at least come out even' than from any other single reason. If to these actual losses are added the profits that might have been made through the proper reinvestment of these funds if such reinvestment had been made when the mistake was first realized, the cost of self-indulgence becomes truly tremendous."

(Common Stocks and Uncommon Profits)

The Ultimate Hold-versus-Sell Test

Here is the overriding primary test, followed by observations on why it is so critically important:

Knowing all that you now know and expect about the company and its stock (not what you originally believed or hoped at time of purchase), and assuming that you had available capital, and assuming that it would not cause a portfolio imbalance to do so, would you buy this stock today, at today's price?

No equivocation. Yes or no?

Answers such as maybe or probably are not acceptable since they are ways of dodging the issue. No investor probably buys a stock; they either place an order or do not.

Here is the implication of your answer to that critical test: if you did not answer with a clear affirmative, you should sell; only if you said a strong yes, are you justified to hold.

Some thoughts on Analysing Stocks (KISS)

Ideally a stock you plan to purchase should have all of the following charateristics:

• A rising trend of earnings dividends and book value per share.
• A balance sheet with less debt than other companies in its particular industry.
• A P/E ratio no higher than average.
• A dividend yield that suits your particular needs.
• A below-average dividend pay-out ratio.
• A history of earnings and dividends not pockmarked by erratic ups and downs.
• Companies whose ROE is 15 or better.
• A ratio of price to cash flow (P/CF) that is not too high when compared to other stocks in the same industry.

Margin of Safety Concept: Stocks should be bought like groceries, not like perfume

The high CAGR in the early years of the investing period, due to buying at a discount, tended to decline and approach that of the intrinsic EPS GR of the companies over a longer investment time-frame.

Chapter 20 - “Margin of Safety” as the Central Concept of Investment

A single quote by Graham on page 516 struck me:

Observation over many years has taught us that the chief losses to investors come from the purchase of low-quality securities at times of favorable business conditions.

Basically, Graham is saying that most stock investors lose money because they invest in companies that seem good at a particular point in time, but are lacking the fundamentals of a long-lasting stable company.

This seems obvious on the surface, but it’s actually a great argument for thinking more carefully about your individual stock investments. If most of your losses come from buying companies that seem healthy but really aren’t, isn’t that a profound argument for carefully studying any company you might invest in?