Value Investment

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Value Investment

Value investing is a kind of investment method or investment philosophy that look at stocks that are undervalued--stock price that is below the intrinsic value but still can seek for the momentum to strong growth in the future. So how to know that whether a stocks is undervalued?  This includes research of importance of the company and its business and also it worth in the market.

In the analysis, company can meet the Intrinsic Value or estimation of the true value of stock. If the price of the stock in the market lower than the Intrinsic Value then it is a stock that is worth to invest for. 

The style that Warren Buffett is using is how well an organization can make profit as a business and he is not worried about that the market will recognize its own value. To make simple Warren Buffett invests into companies that have a good business model with potential profit earning. In order to understand the value investment we are require to have clear understanding on fundamental analysis and financial statement.

Fundamental Analysis

The reason that there is an undervalued in a stock of a company is because of a bad earning report, a change of a company, got sued, company fails to achieve it company financial goals. Fundamental analysis causes a strict evaluation of the company's fundamentals as industry growth, amount of competition, macroeconomic situation that can affect the company. The job of a Fundamental analyst assessment of a security involves the study of financial statement of the company that catch their attention and also study about the company’s ratio.

Financial Statement

Financial Statement is a report that is necessary for listed companies to disclose their information about their financial performance, companies normally issue financial statements once a year. The reason of a financial statement existed is to provide information of financial performance and position of a company. There are 3 other report that is under the financial statement which is income statement, balance sheet and cash flow statement. Investors usually use this information to analyse the company’s value.

 

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