Stage 3 – Find the valuations

Despite what some may suggest, valuations are not a factual part of the equation. They are just another opinion, expressed as a share price, based on many assumptions many of which are also opinion. Intrinsic valuations have many weaknesses, but are not without purpose. It is important to have some concept of “value” or a valuation on a stock. It is a line in the sand that the share price wanders over and under and you need some concept of where that might be. This is the bubble diagram of this part of the process.

This diagram can have has a lot more scribbles on it than this with many more bubbles coming off the bubbles. You can develop your own bubbles on the bubbles.

There are a number of subscription products we use that carry intrinsic valuations. There is even one in our STOCK BOX that usually reflects a good average of other people’s valuations. We collect valuations along with broker target prices and broker valuations (different) derived from reading rather than skimming the research. Basically, you should be able to get a handle on what some smart people think the company is worth, right or wrong.