How to value stocks
Valuing a stock is very difficult process. There are many things you need to keep in mind when you value a stock. You need to do SWOT (Strength, Weakness, Opportunities, Threats) analysis of the business.
Here is the list of important parameters.
- EPS - Earning per share
- PEG ratio should be less than 1
- Debt to equity ratio should be less than 1
- Holding pattern - Promotor and Institutional Holdings should be high
- Positive cash flow
- Constant equity capital
- Return on equity
- Financial Reports
- Management and promoter honesty
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