Quick question for the community: what are some of the value investing models that you like to use? I am presently using DCF for most equities and want to analyze the efficacy of other models. Feel free to overwhelm me with information; this rookie will appreciate the feedback!
Allen Wheeler: Free cash-flow yield seems pretty good to me. Divide free cash flow per share by price per share. I hope that helps.
Ken Faulkenberry: My favorites are Operating Earning Yield, Free Cash Flow Yield, EV to EBIT and EV to EBITDA, and Gross Profitability. These and others are explained here on my website: http://dividendvaluebuilder.com/selecting-dividend…/
Selecting Dividend Stocks With The Dividend Analyzer: How It Works -…
dividendvaluebuilder.com
Evan Bleker: DCF is a terrible valuation method to use. It may be theoretically true, but it’s also nearly impossible to calculate and definitely impossible for those without business or investing experience. The only strategy that retail investors with small portfolios should be using is NCAV. Highest returning strategy by far and simple.
David Geof: I agree DCF model is completely useless. NCAV and NAVPS are great, but you do have to take into account the nature of the business. A technology company sitting on a lot of cash will not necessarily have a lot of liabilities (they do not need to invest heavily in capital as say, a nuclear power plant) – but this would not make them a good investment just because their total liabilities are low
Evan Bleker: Exactly. Their liquid assets have to exceed their total liabilities.
Michael Wei: An important antidote before applying DCF: https://www.amazon.com/Value…/dp/0471463396/ref=sr_1_1…
Value Investing: From Graham to Buffett and Beyond
amazon.com