Valuation
The Most Contrarian Idea I Have
Any reader of my blog recognizes that I generally have an affinity for consumer products and retail facing stocks. In this recession, I’ve also become quite the fan of dividends as manifested in my recent investments – GE, VLO, MO, and LINE. As such, this investment idea probably comes as no surprise – Hotel REITS. [...]
read more »Irrational Retail Valuations
Before the onset of a recession and consumer pullback, investors rarely had to spend a lot of time ascertaining revenue visibility. After all, a rising tide lifts all boats. Find a hot stock, read all the glowing analyst recommendations, and buy knowing that it shouldn’t be too hard to hit forecasts. In a negative growth [...]
read more »Start looking forward
Earnings season officially kicked off today with Alcoa’s $1.49/share loss versus last year’s $0.75/share profit in the same quarter. The market yawned at the news and share’s moved just 0.5% in aftermarket trading. We all know that earnings this quarter will be dismal. In fact, Thompson Reuters expects negative earnings growth in seven of 10 [...]
read more »Required Rate of Return
Now that we know a few methods of estimating future growth, we will round out the analysis necessary for application in the discounted dividend model with a brief look at the Capital Asset Pricing Model which is often used for estimating required rate of return. Obviously, when using the discounted dividend approach to valuation, you [...]
read more »Estimating Growth
The previous post introduced several discounted dividend models for valuing stocks. These models ask for an estimate of growth and required rate of return in order to work. While all estimates require some amount of “guessing” there are some methods which will help you to get more accurate results. Here, we deal with methods of [...]
read more »Dividend Based Stock Valuation
After the last few posts trying to connect the source of stock “value” to dividends, it would only make sense that one could value individual stocks through their dividends (or anticipated dividends). And you can! The method is actually very simple. The value of a stock, or anything else for that matter, ought to be [...]
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