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How do you know if the stock you currently own or are considering to purchase is trading at a price that is too High or too Low ?
Institutional Investors use a formula to generate a Stock " Value " for each stock to allow them to evaluate stocks they own and stocks they are considering for purchase. Stock prices are driven by 3 powerful forces: 1). Earnings, 2). Interest Rates and 3). Inflation. The Stock " Value " Formula produces an intrinsic "Price Per Share" using... A). The Stocks Earnings per Share in $ per Share, B). The current AAA Rated Corporate Bond Interest Rate in %, C). The Return on Total Capital for the Stock in %, D). The Annual Earnings Growth Rate in % per Year for the Stock and E). The current CPI Inflation Rate in % per Year
Institutional Investors use a formula to generate a Stock " Value " for each stock to allow them to evaluate stocks they own and stocks they are considering for purchase. Stock prices are driven by 3 powerful forces: 1). Earnings, 2). Interest Rates and 3). Inflation. The Stock " Value " Formula produces an intrinsic "Price Per Share" using... A). The Stocks Earnings per Share in $ per Share, B). The current AAA Rated Corporate Bond Interest Rate in %, C). The Return on Total Capital for the Stock in %, D). The Annual Earnings Growth Rate in % per Year for the Stock and E). The current CPI Inflation Rate in % per Year
Since the Stock " Value " Formula produces an intrinsic " Value " as expressed in a Stock Price, Investors can determine if a Stock's current Price is too High or too Low when compared to the Stock's " Value ". As example, if the current Price of ABC Stock is $45 per share and the current Stock " Value ", using the Value Formula, is $65, then the stock's current Price is too Low using the Stock Value Formula. On the other hand, if the stock's current Price is $45 and the current Stock " Value " for the stock is $40, then the current price of the stock is too High, using the Stock Value Formula.
WallStreetSignal's Stock " Value " System also uses Green, Yellow and Red background color schemes to help recognize Favorable and Un-Favorable Stocks based on the Stock " Value " Formula.
| Examples of How to Use Stock "Values" . . . | ||||||
| Stock: | Current Price: | Current "Value": | Current "Value" ABOVE Current Price (In $): | Current "Value" ABOVE Current Price (as %): | Price Appre- ciation Potential: | Conclusion: |
| ABC | $22.00 | $26.00 | $4.00 | 18% | 18% | Buy, Stock is 18% too Cheap |
| DEF | $30.00 | $24.00 | ($6.00) | (20%) | (20%) | Sell, Stock is 20% too Expensive |
| XYZ | $44.00 | $44.00 | $0.00 | 0% | 0% | Hold, Stock is Fairly Priced |
