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| Members present: Brian (with Justin) and Yousef |
Last week we proposed to look at a company and try to examine the financials in order to put some of our recent knowledge about stock valuation to use. We chose Target. With an established company like this it is best to look at the YPEG, or yearly projected growth. We get this by multiplying the stock's projected growth by their current price.
In our quest to understand stock valuation we stumbled across http://www.freestockvalueranker.com, which seems to pull data and do the math automatically. The problem is that we still don't understand the numbers involved yet.
Here's a screenshot with all those glorious numbers:
We started to crunch some numbers and are beginning to understand the rationale between something being under- or overvalued based on P/E ratio and PEG. They are two different ways of trying to gauge whether a company is over- or undervalued. The idea is that an undervalued company is expected to some day reach its value, and you are catching them on the upswing. Sort of like being the first person to like an awesome band before they become popular.
We obviously need to continue working through this before we are prepared to make financial decision based on these valuation methods, but the hope is that we will be able to do that soon.
On another note, the particular type of sell that we tried to use on our SPY stock saved us from dumping it before it grew a bit.
No profit now for future profit later.
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