How to calculate the value of every stocks
In this video Luca Discacciati explains how to calculate the intrinsic value of stocks by projecting future company performance and discounting future cash flows. It emphasizes the correlation between stock prices and corporate results, discusses the impact of risk-free investments, demonstrates forecasting techniques, and highlights the use of diverse valuation methods for accurate assessment.
- Stocks Follow Corporate Performance: Long-term stock prices correlate with a company's sales growth, as illustrated by Apple's stock price alongside its sales trajectory;
- Calculating Fair Value: Fair value of a stock is determined by discounting future sales to present using an appropriate interest rate, requiring projections of future company performance;
- Risk-Free Investments Impact: The yield on risk-free investments, like U.S. Treasury bonds, influences the present value of future money;
- Forecasting Methods: Techniques such as linear and logarithmic trend lines are used to forecast future company performance based on historical data;
- Diverse Valuation Approaches: Multiple valuation methods, including discounted cash flow, Peter Lynch method, and economic value added, are employed to assess different aspects of a company's financial health and arrive at a comprehensive valuation.
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