Rancakmedia.com - Method fundamental analysis stocks is a method for investing in capital stocks that is profitable, safe and ensures a quiet existence. Unfortunately, many don't understand basic stocks and take the wrong route.
I put together 10 notes on fundamental stock analysis for making long-term profits. The share price has been destroyed, the JCI has fallen once. That's what happened in early 2020! An event that was never anticipated happened.
The effects of the epidemic have devastated stock markets around the world. Corona Covid-19. Many people are in a hurry to quit this investment in this very turbulent economy and stock market. Sell the shares! Sell the shares!
A friend liquidated 90% from his stock investment, afraid to see the stock price fall bottomless. Are you currently a stock investor or just intending to get into this scenario, what should you do?
I would say stocks are still the best tool, despite the sharp drop in stock prices. How can you benefit from sustainable stock investing? Do a fundamental stock analysis. What is fundamental analysis?
Here's the Correct Way of Stock Fundamental Analysis
The performance of the company or issuer drives the stock price.
Fundamental analysis uses financial reports to evaluate or evaluate stocks by assessing three main issues, namely:
- Assess the performance and condition of the company, whether the performance is good and sustainable.
- Determine a fair price reference for shares that will be the benchmark for choices to buy and sell shares.
- Monitor and analyze stocks on a regular basis to ascertain whether the shares are still worth investing in or not.
There are ten main items in stock that you need to pay attention to, namely:
- Choose a Good and Solid Company
- Reasonable Share Price Reference
- Margin of Safety (MOS)
- Master Financial Reports
- Pay Dividends, Good Stocks
- Valid Information Source
- Stock Screeners
- Long-term, Stupid!
- Give Management a Chance to Work
- Prepare Mentally (Lock Everything!
1. Choose a Good and Strong Company
Look for a good, good company with proven financial performance and future prospects. In short, choose a company for me that can last 'another 1000 years.'
Warren Buffet, the world's richest man who lives off stock investing, once offered advice, buying a company you can comfortably buy 20 years, 30 years or a lifetime.
Holding multiple stocks for decades, Buffett makes his case and has never sold for the most part. How to find a company like this?
You have to take advantage of past performance to judge whether this is a good company or not. Study the financial accounts for the last few years, and evaluate the performance of the company for at least five years.
It is also important to use past performance to forecast a company's future. How wonderful it would be if you mastered the company's business.
For example, I have been working in the financial sector for a long time, so I understand banks and financial organizations quite well both inside and outside. I used this information to concentrate on investing in bank stocks.
2. Reference Appropriate Share Prices
The basic objective of this research is not only to choose a good business, but also to buy company shares at a reasonable price. We want to buy shares that are undervalued by the company.
You need a price reference to be able to determine the price of a stock, good or bad, cheap or expensive. So after that you don't just buy or follow what other people say, because the right stock price reference already exists.
When the market emerges, price benchmarks are very important and you must decide whether to buy or sell your shares. You can more easily determine whether you want to buy, sell, or do nothing if you have good price references.
If you don't have a reference, in my experience, the influence of market movements is very simple, which may be wrong and not the state of the company's stock. Buy and buy, sell and sell and do the opposite.
How can the reference price be determined? There are two kinds of assessment methods, namely relative assessment and inherent assessment.
The simplest method of achieving this is to make a relative assessment, comparing the business's stock to that of other comparable companies. The indicators considered in the relative assessment include:
PBV PBV (Price to book value). Price to book value ratio. Price to order Enterprise value.
BEFORE (price to income ratio). The price-to-income ratio. Price per share to assess net income
Intrinsic valuation uses valuation judgments to value a business based on its capacity to generate future cash flows and to discount those cash flows to determine a fair price.
3. margins of Safety (MOS)
Benjamin Graham developed the concept of the Margin of Safety in his famous book, The Intelligent Investor.
The concept is basic but powerful. Basically, you have to buffer to anticipate future uncertainties while generating forecasts.
But we anticipate future events while generating price predictions or benchmarks, which influence and relate to many variables. Who would have thought the world would be hit by a pandemic in 2020?
Indeed, no one will ever know. Thus you must offer MOS against the estimated price you provide. For example, if you set $5,000 as your reference fair price based on fundamental research, your goal is not $5,000 but 30 to 40 percent of the price, or $3,500 to 3,000.
How much MOS should this be? There are no clear references because your actual level of analysis depends on your views. But I noticed MoS references ranging from 30% to 50%.
4. Master Financial Reports
Your scriptures are basically financial accounts. Good understanding of how business financial statements are viewed and analyzed.
Of course, there are various indicators in each sector to identify the best stocks to read and evaluate financial reports.
There are many fundamental ratio indicators that are widely used as an analytical method to evaluate a business based on an examination of financial statements:
- ROE Return on Equity. What is the return, profit of the business, relative to shareholder equity or paid-in capital? The higher the better. Better.
- EPS earnings by share. Profit per share of the company. The better the higher the better. In evaluating the value of inventory, EPS is an important element.
- Assets and responsibilities. How many assets does the business own and are those assets productive enough to create debt for the company and how does the company fund hold those assets with large bank loans (not good), or mostly with own capital (better) or with supplier loans (also good).
- Bank debt. How much does the business owe to the company's bank (DER debt ratio Debt Equity Ratio) and is the company in a position to pay debt interest and not burden the company's finances.
- Cash flow analysis. Cash flow analysis. This study demonstrates a company's capacity to create cash, which is the lifeblood of a business that should be generated by its operations and revenues and not from debt or capital inflows.
It is not easy to study financial accounts, analyze basic ratio analysis. You need to understand the company's business to master financial reports with competent people.
My advice is that you focus on a few, not many companies, to examine the financial statements, carefully study the financial ratios to determine the investment. I usually focus on building a business or line of business that I know and understand.
5. Good Stocks, Pay Dividends
What is meant by dividends? Dividend is a portion of profits given in cash to shareholders which is approved by the general meeting of shareholders (GMS).
Why is it important to pay dividends? Of course, as a shareholder, you are happy to make money, although many shareholders want future companies to reinvest their earnings in the larger development of the company.
Besides indications that dividend payouts are just as important as profit sharing, they show that the company is strong and has solid cash flow.
The company has generated profits, but not necessarily strong cash flow. It may be a big win, but it's really no cash.
Dividends are proof of a company's profitability and profits, and are genuine because they can be given to shareholders in cash.
Poor company performance is unlikely to provide dividends, because profits will be used to improve company performance. To me, consistent dividend payouts are an indication of the company's strong foundation.
6. Valid Information Sources
Fundamental analysis includes important sources of information about stocks, issuer's financial performance, company background and corporate actions.
Not only important, but also very important! The problem is, many actors or investors decide to invest based on rumors and rumors in the stock market. Some of the bad ones are motivated by day-to-day problems on the trading floor, whether the stock is good or not.
7. Stock Screeners
Is there a quick method for doing basic stock analysis? Imagine hundreds of stocks on the IDX, if each of them has done a fundamental analysis, how long will it take. Also, you can't do a thorough fundamental analysis because of the large number of stocks examined, although depth is important in this situation.
Fortunately, there are stock screeners, which are tools offered by stockbrokers that allow you to select stocks based on your own criteria.
You can choose from a variety of criteria for selecting stocks. You can choose between market cap, dividend, performance and even technology analysis.
Below is a session of questions that we will answer clearly, see the following:
What Does Fundamental Analysis Include?
Fundamental analysis or fundamental analysis is an analytical technique that takes into account various factors such as: Company Performance, Competitive Analysis, Industry Analysis, Macro-Microeconomics and Market Analysis. This shows whether the company is still healthy or not.
Benefits of Stock Fundamental Analysis?
Fundamental analysis has several uses in stock investment, including:
- Recognize the right time to enter or exit the stock market
- Help you choose good stocks to invest in
- Know the fair price of a stock
- Set a time frame
- Beware of cheap PER
- Use moderate projection assumptions
- Consideration of sectoral situations and conditions
Purpose of Fundamental Analysis?
In general, fundamental analysis is used to study the basics of economics, balance sheets, income statements, etc. On the other hand, technical analysis is concerned with studying the historical performance of price movements by comparing them with future price movements.
Stock price has fallen, JCI has fallen once. That's what happened in early 2020! An event that was never expected to happen. Many don't understand basic stocks and take the wrong route. I put together 10 notes on fundamental stock analysis for making long-term profits.
The purpose of this research is not only to choose a good business, but also to buy company shares at a reasonable price. You need a price reference to be able to determine the stock price, good or bad, cheap or expensive.