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700 profit club

by princy william (2019-02-13)

The approach to a company 700 profit club Review valuation essentially incorporates the future earning power of the company. Wall Street's dirty little secret, however is that stocks actually trade around that stock value much like a pendulum swings back and forth. The reason harkens back to the portfolio managers' motivations, which is that they need to outperform the market. They do this by buying stocks that are near the low end of a valuation range, which have room to appreciate. Stocks are sold that are nearing the high end of the stock's price range, which suggests they are overvalued. Being disciplined contrarians helps managers succeed.When one looks at a variety of stock valuation criteria historically ie over a 10 year period, these ranges become evident. Some variables give a better valuation fit than others. For example, tech / growth stocks are typically valued on a P/E, relative (to the S&P 500) P/E, and PEG ratio (P/E to growth) while capital intensive groups like airlines and manufacturing companies with big factories and lots of physical assets trade more on a price to book value ratio.When those ranges are then applied to projected EPS, book value (BV), sales per share, dividend yield and the like, we can project future price ranges with some confidence based on these current inputs. If one can capture and utilize these historical ranges and apply them to analysts' estimates of future projected returns, a fairly useful picture emerges of probable future trading ranges,- at least ranges that the big market movers are also looking at! The result is an actionable price range that is both transparent and insightful! It definitely narrows the information gap between the small investor and large market movers. Thus one can glean insight into the minds and potential movements of large fund managers and ride the wave of stock performance rather than getting caught swimming against rather large forces.