Stock-Picking Strategies: Conclusion
Let's run through a quick recap of the foundational concepts that we covered in our look at the most well-known stock-picking strategies and techniques:
- Most of the strategies discussed in this tutorial use the tools and techniques of fundamental analysis, whose main objective is to find the worth of a company, or its intrinsic value.
- In quantitative analysis, a company is worth the sum of its discounted cash flows. In other words, it is worth all of its future profits added together.
- Some qualitative factors affecting the value of a company are its management, business model, industry and brand name.
- Value investors, concerned with the present, look for stocks selling at a price that is lower than the estimated worth of the company, as reflected by its fundamentals. Growth investors are concerned with the future, buying companies that may be trading higher than their intrinsic worth but show the potential to grow and one day exceed their current valuations.
- The GARP strategy is a combination of both growth and value: investors concerned with 'growth at a reasonable price' look for companies that are somewhat undervalued given their growth potential.
- Income investors, seeking a steady stream of income from their stocks, look for solid companies that pay a high but sustainable dividend yield.
- CAN SLIM analyzes these factors of companies: current earnings, annual earnings, new changes, supply and demand, leadership in industry, institutional sponsorship, and market direction.
- Dogs of the Dow are the 10 of the 30 companies in the Dow Jones Industrial Average (DJIA) with the highest dividend yield.
- Technical analysis, the polar opposite of fundamental analysis, is not concerned with a stock's intrinsic value, but instead looks at past market activity to determine future price movements.
The strategy of selecting stocks that trade for less than their ...
A type of large-cap stock investment where the intrinsic value ...
Intrinsic value is the actual value of a company or an asset ...
The process of determining the current worth of an asset or company. ...
A business valuation method that uses discounted cash flow analysis ...
A financial security or other type of investment that is selling ...
Take a deeper look at why value investors consider a stock's intrinsic value an important consideration before picking a ... Read Answer >>
Discover the differences between intrinsic and market values, what makes the former difficult to determine and how investor ... Read Answer >>
Learn about the differences between technical analysis and fundamental analysis, such as how these investment strategies ... Read Answer >>
Discover how the intrinsic value and market price of a stock are related and why a stock that appears overvalued may still ... Read Answer >>
These terms refer to two different stock-picking methodologies used for researching and forecasting the future growth trends ... Read Answer >>
Find out which items in the income statement are considered in fundamental analysis. How do investors use revenue, profit ... Read Answer >>
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