Similarly, if a banking company is trading at a price to book value of 4x compared to the industry average of 9x, then again the bargain hunters first need to investigate the reason behind the low
valuation of that stock before concluding it as a value stock.
Not exact matches
Stock markets could see sharp falls
before the end
of year as
valuations have hit disproportionate levels, one strategist told CNBC.
I've noted
before that while the bubble peak in 2000 was the most extreme level
of valuation in history on a capitalization - weighted basis, the recent speculative episode has actually exceeded that bubble from the standpoint
of speculation in individual
stocks.
As I've noted
before, the duration
of stocks is over 60 years here (at normal historical
valuations, the duration has been closer to 25 years).
For me, it's hard to get excited about
stocks at these
valuations when I can add to my rental portfolio and earn 15 - 20 % cash on cash returns quite easily
before accounting for any appreciation and loan paydown...
of course you have the headaches
of managing tenants and maintenance issues, but even if you pay a 10 % management fee, the numbers are still a lot better than average
stock returns.
Wal - Mart
stock (WMT), which had traded at $ 63
before the 2008 - 2009 financial crisis, was still trading in that range five years thereafter when the
stock was at $ 67 in 2013,
before investors pushed it towards $ 110 (a
valuation of 24x trailing earnings!)
The following sections: Dividend Safety, Profitability, and
Valuation; provide a multifaceted and well - informed view
of the important metrics to consider
before deciding whether to continue further research
of a particular dividend
stock.
Investors don't typically wait for high levels
of inflation
before adjusting
stock valuation multiples lower.
Fisher is known for two things: predicting that
stocks had reached a permanently higher
valuation level just
before the 1929 crash and explaining that the nominal interest rate is the sum
of inflation and the real interest rate.
Starting at today's
valuations, it takes about 20 years
before a
stock market investor can be reasonably confident (80 % +)
of achieving a gain (after inflation) even though he uses dollar cost averaging.
Also, historically,
stocks spent a good amount
of time at below - average
valuations before sideways market turned into a secular bull market.
I've previously suggested FBD Holdings (FBD: ID) as perhaps the best single
stock exposure to Ireland, but if you prefer a more diversified bet, IRL appears the obvious choice... Note there's only a handful
of stand - outs locally in terms
of market cap, so it's worth taking a look at Kerry Group (KYG: ID), Ryanair Holdings (RYA: ID), Aryzta (YZA: ID) & CRH (CRH: ID)(NB: 2012 comment /
valuation)
before buying — as they account for 41 %
of the fund.
In reality, a
valuation's only one (albeit, an essential) component
of the analysis you perform
before buying a
stock.
Thanks, Charles — yes, it's on the to - do list, and RCII & a bunch
of other
stocks will be in there — I won't be doing any individual
valuations / write - ups (that's not the purpose
of that series), but hopefully I'll provide some decent running commentary & list a good few interesting names a lot
of readers may not have come across
before (like I said, this seems a fairly neglected / obscure sector for most people).
Also, for the purposes
of tracking, a 6 - 12 mth old
valuation will almost always still be a perfectly adequate indicator
of value (but I recommend you thoroughly update your
valuation on any
stock before actually pulling the buy / sell trigger).
Valuation - Informed Indexing $ 367 on the topic
of how and why
Stock investing Works and the role
of Robert Shiller By Rob Bennett Sometimes when I am ready to leave for an appointment five minutes
before I need to leave, I -LSB-...]
But just as important, each and every
stock also undergoes a process
of valuation before I invest, as I want to make sure that a dividend growth
stock is undervalued
before I buy.