How to buy good stocks at a cheap price

Making a smart investment in a good company will get you a high return of capital. But what is “good”? And how do you know if it is “cheap”?

For example, a highly leveraged company can have a high ROE during the boom stage of the economy, but suffer huge losses and face a high bankruptcy risk in times of economic crisis.Hence, it is preferable to use the return on invested capital where all capital contributors are taken into account, and resources not utilised in the ordinary operations such as excess cash excluded. It also excludes those one-time off items.

The biggest danger is that the firm will lose its lustre over time when the high expectations are not realised and the premium paid dissipates. Besides, different times, industries, different growth profiles, health of balance sheet etc will result in completely different PE ratios. All the above are only valuations in relative terms. The best is if one can estimate the intrinsic value of the stock well and then invest in the company with a wide margin of safety. That involves the controversial discount cash flows analysis.Why does this still work in Bursa?

Malaysia Latest News, Malaysia Headlines

Similar News:You can also read news stories similar to this one that we have collected from other news sources.

Miso soup: a common companion to rice and sushiThis beloved, easy recipe is part of the quintessential Japanese diet, and for good reasons. FMTNews FMTLifestyle
Source: fmtoday - 🏆 5. / 72 Read more »

Bursa Malaysia ends lower as MCO weighs heavy on marketLosers outnumber gainers 980 to 199 but good new is a smaller contraction in Q1. FMTNews BursaMalaysia
Source: fmtoday - 🏆 5. / 72 Read more »

Malaysia records current account surplus of RM12.3 billion in Q1 | The Malaysian InsightChief statistician Mohd Uzir Mahidin imports of goods surged by RM14.3 billion quarter-on-quarter to RM189 billion due to the increase in intermediate and capital goods, which were mainly from China, Singapore and Japan.
Source: msianinsight - 🏆 8. / 63 Read more »

Ringgit eases against US dollar in early tradeSoaring commodity prices, a robust export market should offer a lifeline to the ringgit, says analyst. FMTNews
Source: fmtoday - 🏆 5. / 72 Read more »

Price hikes ruffle feathersPenang KPDNHEP in is not letting down its guard in weeding out unscrupulous traders who are taking advantage of the Raya season.
Source: staronline - 🏆 4. / 75 Read more »