Investors generally underperform in the market because they do not buy healthy and cheap stocks, but they buy stocks that get their attention.
The reason why this approach leads to underperforming returns is that the stocks covered in the media are closely followed by the masses. Thus, they are less likely to be undervalued. Furthermore, if you invest in stocks that everyone else is investing in, your performance will be equal to that of the others, average at best.
However, you cannot really blame people for this approach, because analyzing thousands of publicly traded companies is a daunting task. Or is there an easy way to filter out the hidden gems? I would argue that there is a way, and in this eBook, I take you through my simple 3-step process to find healthy, undervalued stocks to invest.
What inspired me to write this detailed guide was the realization that I learned this stock discovery process by combining information from several books and countless online articles. This eBook is simply the guide I wish I had had available to me when I was starting out as an investor.
Step 1: Generate ideas
The first step is to screen out good companies from the trash and set up a preliminary stock selection for further analysis.
Step 2: Create your wish list
The second step is to take a closer look at the company. We are looking for quality and we only want to invest in wonderful companies.
Step 3: Estimate the intrinsic value
In the final step, it is time to check whether the price is right to buy the stock. In the eBook, 3 valuation methods are described in detail to estimate the value of a stock.
I have provided all 3 valuation methods as Excel file. You can also use the Excel file as a template for your future analyses.