Streetsmart Guide to Valuing A Stock: The Savvy Investor’s Key to Beating the Market

Streetsmart Guide to Valuing A Stock covers everything from basic stock valuation to more advanced valuation models and techniques. Its nuts-and-bolts, nontheoretical methods will be invaluable in helping you locate and analyze undervalued stocks. The book outlines the fundamentals of making an investment decision in a stock based on a reasoned evaluation of that stock’s worth. The writing is direct, logical, and remarkably interesting.

Intorduction:

Streetsmart Guide to Valuing a Stock is a how-to book that provides you with the tools to make money in the stock market. The book’s focus is on stock valuation—an area of great interest to many investors, but understood by very few. When you’ve finished this hands-on, easy-to-use guide, you will have learned how to:

• Value stocks of general market and high-tech companies, such as Microsoft and Cisco Systems;
• Value stocks of financial companies and real estate investment trusts, such as Citigroup, Merrill Lynch, Berkshire Hathaway, and Washington REIT;
• Spot undervalued or overvalued stocks for buying and selling opportunities;
• Estimate important valuation inputs such as growth, operating margin, and cost of capital;
• Find valuation inputs on free Internet Web sites;
• Develop a spreadsheet to value a stock;
• Combine stocks in an efficiently structured investment portfolio;
• Manage your risk; and
• Use the 10 principles of finance to your advantage.

This book is for all of you who mistakenly think you have to be a stock market guru to value stocks like a pro. All the tools you need to value stocks are outlined in the chapters that follow. All that is required is a bit of patience, practice, and persistence. You don’t need an MBA to understand the book’s concepts or the 10 principles. The goal of the book is to give all stock market participants—individual investors, investment club members, stockbrokers, SEC staffers, corporate managers, directors of corporate boards, and ordinary people who want to learn about stock valuation—a simple quantitative approach for estimating stock values. Our model is a recipe for correctly and conservatively valuing common stock and increasing investment profits.

Our goal is to teach you about stock valuation by using a simple and powerful valuation model. This book will make you a better informed, more intelligent, more profitable investor and will help you to understand why stocks such as Cisco trade at $14.45 and Berkshire Hathaway trades at $72,000 per share. Our valuation approach revolves around some very simple calculations that use only addition, subtraction, multiplication and division—no calculus, differential equations, or advanced math. So let’s begin by taking our initial plunge into stock valuation.

Contents:

• INTRODUCTION AND OVERVIEW
• THE 10 PRINCIPLES OF FINANCE AND HOW TO USE THEM
• STOCK VALUATION: SOME PRELIMINARIES
• HOW TO VALUE A STOCK
• FORECASTING EXPECTED CASH FLOW
• ESTIMATING THE COST OF CAPITAL
• FINDING INFORMATION FOR VALUATIONS
• VALUING A STOCK—PUTTING IT ALL TOGETHER

Streetsmart Guide to Valuing A Stock: The Savvy Investor's Key to Beating the Market By Gary Gray, Patrick Cusatis, J. Randall Woolridge pdf