How to Value the Actual Price of Stocks
With a universe of stocks totaling more than 8,000 and growing daily there has never been a better time to invest in stocks for superior returns given the wide selection. The dilemma for a novice investor is how to value the actual price of stocks. Fortunately, there a few simple steps to find stocks with lots of investment potential using free tools readily available to you.
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Instructions
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Finding The True Stock Price
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From a computer with Internet access, go to Yahoo Finance. To determine a stock's value, enter its name in the search portal. It will pull up the current information on the stock's price action as well as a current chart. Take notice of the number of shares issued on that company and write that total down.
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Go to the left hand footer and scroll down to the "Financials" section and click the "Balance Sheet." On the Balance Sheet, scroll down to the bottom of the sheet and take note of the current Net Tangible Assets and write that down. The Net Tangible Assets is the hard asset value, which is arrived at by adding all assets and then subtracting all liabilities. Write that figure down.
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Take the total Net Asset value and divide that by the number of shares issued on this company. That final number is the true stock price value for the shares on any publicly traded company.
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Tips & Warnings
Another good indicator of a stock's potential is the ROE or return on equity. This is the return a company gets on its assets and also is a good indicator of how capable a company's management team is. Stick with good stocks that have a good ROE of 30 percent or greater.
Beware of companies that have a high debt. High debt on a company is like carrying a dead elephant on its Balance Sheet. It takes away from positive revenue growth and leaves the company vulnerable to downturns in the economy.
