Calculating Intrinsic Value – The PE Ratio

Ask any investor what the PE ratio is and I’ll bet you that many will reply that it’s a method of valuing a share. Given the P/E ratio is calculated as the share price / earnings per share, it seems almost too easy. I’m mean where can you go wrong?

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A review of the top 50 Australian stocks (S&P 50 Index) – Part II

In a previous post, I reviewed several stocks in the ASX Top 50 and found 21 stocks that I wasn’t interested in. So, what about the rest of the stocks? Well, let’s go through the list and have a brief look at each of them.

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There's gold in them there stocks!

There are several ways of gaining exposure to the gold price, through gold futures, physical gold, GOLD securities traded on the ASX, and shares in gold mining companies. Today I’m going to review three gold stocks that I think look like very good value. The 3 companies are Dragon Mining (DRA), Kingsgate Consolidated (KCN) & Ramelius Resources (RMS).

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Calculating intrinsic value – price equals value

In a previous post I mentioned a few different ways of calculating intrinsic value of a share. Today I’m going to discuss price equals value. Basically this means that the market recognises the real value of a company and its shares, and the value is equal to the price. If you are a believer in efficient markets, which states that new information is quickly incorporated into the share prices, so the market price reflects the true value of a share every moment of every day, then you are probably nodding your head at this point.

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The Australian stock markets mid-year sale

Thanks to the recent falls in the share market, there are many stocks trading at what I think are bargain prices. When you see headlines like “$33 Billion wiped from Australian share market” and “Australian market loses $33 billion in one day”, its time to go bargain hunting. The stock market is irrational and many companies’ share prices have been savaged for no apparent reason. While it can be hard to think of this news as good, as an intelligent value investor, you should welcome the news. It’s an opportunity to buy those stocks you covet at cheap prices. As Warren Buffett has been quoted a million times “Be greedy when others are fearful, and fearful when others are greedy”. At the moment, I think there is a lot of fear in the market, which is a good time for us.

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