Besides educating yourself, the best way to find undervalued investment is to have lots of investing idea. Having investing idea allows you to compare investment alternatives and pick the best one.
People sometimes lament that they seldom find stocks that fill the criteria as undervalued. How can you find a 0% growth stock at a P/E of 13.4? A lot of companies are trading at a P/E of 20 or more. How can you find companies that have positive net cash? Lots of companies have more debt than they have cash.
All of the above is true. Most companies do not trade at undervalued territories. A lot of them also incur a lot of debt and their balance has a negative net cash balance. And that is why you will be rewarded when you can find undervalued stocks. Think about it. If a 0 % growth stock is traded at a P/E of 10 and its fair P/E value is 13.4. This is a 34% potential return.
To get that kind of potential return, investors need to sort out good companies from the bad and be more selective in buying a stock. This is where investing idea comes into place. When you receive plenty of investing idea, you can be more selective in buying the common stock. So, where can you find investing idea?
One good investing idea source is stocks that fall near its 52 week low. Businessweek screener seems to provide a decent neatly arranged results. For links, you can visit our commentary section and read this article. Another good source for investing idea is by reading financial news from various publications such as The Motley Fool, CNN, thestreet.com and smartmoney. Stocks that fall hard are sometimes mentioned here.
Finally, a good source of investing idea is by regularly visiting our commentary section at: http://www.noviceinvesting.com. You may not agree with our assertion but at the very least it will open your mind about other possibilities and industries. The best thing of all is that it is free ! You can access useful commentary from various sources with zero cost. What else can you ask for?
Sure you know what’s auction. But do you know by buying foreclosure in auction, you can actually earn up to 100,000USD; or save up to that amount if you are buying a foreclosure home for residential purpose? Of cause, those profits happen with the conditions you have the resources needed.
Buying great foreclosure bargains in auction at local country house isn’t that easy at all. It’s not about how much you afford to pay, it’s about how many info you have and how well you use the info. Thus, do research before stepping in the court house is very important. Find out the true value of a foreclosure home so that you know what your bidding limit is. For example, if the result of your research tells you that a foreclosure home’s market value is 200,000, after deducting the repair cost, let say 20,000, you will still be earning a great amount if you bid at 130,000 after the last and nearest bid of 100,000. Yes, it’s all about business in auction. You got the info, you got the money.
Thus, research the foreclosure home in details. Check the neighborhood of the foreclosure home. Is it near a field? How far is the foreclosure home from town? Is there any factory near by? How’s the piping system? What’re the market current needs? These are factors affecting the market value of a property. And those are why foreclosure listings are growing more important in this buying foreclosure business. Foreclosure listings gather all the necessary info of a foreclosure home. You can always start your foreclosure research from the listings.
To win in auction, you need skills and info. You need to first find out the market value as well as other details of the foreclosure home. Knowing those things help you in setting your bottom line, your bottom line of bidding price. Because to win in auction, it doesn’t mean how less money you spend to get the property, but how big is the difference between your bidding price and the market value of a foreclosure home. Set a bottom line for yourself based on your research. If the market value of the foreclosure home is 150,000, your bottom line would be around 130,000. (Lesser down your bottom line a bit from the market value in case of some calculation mistakes or changes of the market.) Stick to your bottom line in auction, because if you exceed your bottom line, you would have to bear unpredictable losses. There is no point to buy a financial burden instead of a bargain at first, isn’t there?
There is no short cut for winning in foreclosure home auction. You will need to research and research to gather info as much as possible. Yes, it’s not easy at all to win in foreclosure auction. However, the good news is, it’s not that hard too to win. As long as you have the persistence, you will win. Seeing the fruitful return in foreclosure auction, it’s worthwhile to put in efforts. To know more on foreclosure auction, I suggest you to get a f oreclosure book as the book can show you more things which a piece of article can’t.
With thousands of stocks, mutual funds and exchange traded funds to choose from, it may seem like a daunting task to separate the wheat from the chaff.
Don’t let the shear numbers discourage you.
By applying three simple steps, you’ll quickly have a small list of strong performing stocks… ready to work for you, putting money in your pocket!
First… you need to identify which stock sectors are performing better relative to the broad market.
This is called Relative Performance Analysis.
For example, you might compare Healthcare, Oil, Computer and Retail sectors against the Standard and Poor’s 500 Index.
Start by comparing the last three months of price activity. This is a significant time period for identifying emerging trends.
You’ll want to select sectors and indices that are positioned well above the broad market… those in a strong uptrend.
The higher the percentage reading, the better the index is performing.
There are many Web sites to help you do this quickly and efficiently. For instance, StockCharts.com has a section called PerfCharts which already has predefined comparisons ready to go.
Additionally, you can customize your analysis by entering your own index, sector or stock symbols. Take the time to familiarize yourself with this powerful stock analyzing tool. You’ll be using it often.
Second… take the strongest sector and compare it against the component stocks that make up the sector.
For example, if the AMEX Morgan Stanley Healthcare Providers Index (RXH) is performing well, compare it against LifePoint Hospitals (LPNT), Universal Health Services (UHS), Tenet Healthcare (THC) and Triad Hospitals (TRI)… all component stocks of the index.
Some component stocks will out-perform their index. Others will not.
Take the strongest stocks (highest percentage) and add them to your list.
If the PHLX Oil Service Sector (OSX) was another strong performer, take the component stocks and compare them to the index itself. Then, add the best stocks to your list.
A list of component stocks can be found at each exchange that sponsors a sector or index. Some exchange Web sites include: amex.com, phlx.com and cboe.com.
Third… once you have compiled a short list of stocks you’ll want to apply some simple technical indicators in order to determine appropriate entry points and price target objectives.
You might use Elliott Wave, Fibonacci or candlestick analysis to help you make your decision.
Now, it’s time to pull the trigger… make the trade and let the profits run.
You’ll find relative performance analysis a choice addition to your investment toolbox.
Let it be your starting point and basis for all your trading decisions.
Good trading!
