Hi guys,
Right now I admittedly don't pick stocks on fundamental evaluations. I have taken scrolls through the stocks I invest in and look at how much money they earn, how much debt they have, P/E ratio, market cap, annual growth or quarterly growth, and that's about it. I want to understand further how to properly value a company. I want to look at these numbers and better understand the relationships they have in a bigger picture. A lot of the times I will just read other analysis papers done by individuals, but I want to be able to form my own conclusions based on cross-analysis.
I have been relatively successful in the last 3 years or so of investing, with a 38% return last year, but I know this is by mostly luck and a good market. I do think deeply about the companies I invest in and their futures, but I have not been concerned enough with their actual numbers, or comparing them to competing companies numbers, to determine if something is a fair value.
An example is I have been invested in Shopify, only to realize today that their stock value represents (ev/r) 10.5x their annual revenue. To me this seems overvalued, but I wasn't even aware of this fact. It's a lack of due diligence, but even trying to do due diligence I do not have enough of an understanding to put together a strong analysis because I can see a number but not know how it applies. An easy example would be how does one derive any true meaning from a P/E ratio?
I just would like to learn which numbers are most important, understanding cash flow better, and if you have a process of things you look at that are most important & things to consider.
Thanks.
Submitted May 09, 2018 at 11:49PM by GreenScreen20 https://ift.tt/2G0SE8v
