In this article, I will discuss why the weighted average cost of capital (WACC) is flawed as the discount rate, and what individual investors can use instead to discount future cash flows in a present value calculation. The WACC is a calculation of a firm's "cost of capital," which is the weighted average of a […]
In this article, I will cover how to use dividend discount models to value dividend stocks in the stock market. Although the discounted cash flow valuation (DCF) model may provide a better means of determining a company's intrinsic value, dividend discount models remain a useful tool for estimating value, particularly with companies that regularly use […]
In this article, I will discuss how to identify an economic moat, a distinct/durable/sustainable competitive advantage a company has over others in the same industry or sector. Identifying an economic moat is an essential part of the analysis process for value investors looking to make a long-term investment. Without a strong economic moat, companies are […]
In this article, I will discuss the importance of stock buybacks for investors, what positive or negative implications they may have for investors, and what things investors should look for when analyzing companies that do stock buybacks. In short, a stock buyback, or share repurchase, is when a company purchases shares of their own company, […]
In this article, I will show you to how to value a company using the discounted cash flow model (DCF), and will guide you through a complete DCF valuation for a real company on the stock market. By doing so, we'll be able to estimate the company's intrinsic value, which will tell us whether the […]
In this article, I will cover how to accurately estimate terminal value, which is a figure you'll need to calculate when using the discounted cash flow model (DCF) to value businesses. I'm also going to discuss three ways of calculating the terminal value, in regards to companies on the stock market, and which method to […]
In this article, I will discuss the importance of return on invested capital, how you can calculate it, what company information the figure provides to investors, and how you can analyze this figure to make better investment decisions. I'll also provide several examples along the way to guide your understanding. The short answer on why […]
In this article, I will discuss the two investment platforms you can use to build your own mutual fund portfolio in 2021. This is only possible with the power of fractional share investing, automated rebalancing features, and a more involved active management role. Although creating your own mutual fund is entirely possible, for most investors […]
In this article, I will discuss why stock prices fall after beating earnings (aka good earning announcements), which is a common question many new investors ask around earnings season. The short answer to this comes down to the future expectations of analysts and investors, along with supply and demand. These two factors therefore drive much […]