WHY NEED A STOCK VALUATION?

A stock valuation is a way of determining how much a stock is worth. In other words, valuation is about finding true value by applying a formula to calculate the intrinsic value of a stock.

What is stock valuation?

Stock valuation is an activity that helps stock investors determine a stocks intrinsic or true value.

It can be understood simply that stock valuation is the act of helping investors evaluate and determine the true value of a stock at present. From there identify the market as well as the portfolio and make investment decisions.

What does stock valuation mean?

Stock valuation is very important in stock investment. This is not only a decisive factor affecting investors, but can also directly affect the businesses that issue those shares. Therefore, it is necessary to value securities because:

• For businesses: Stock valuation is one of the important and necessary steps for a joint stock company when it wants to raise capital, offer shares or raise the business influence on the stock market. contract
• For investors: Investors know which stocks are most profitable and worth buying through stock valuation. From there, it is possible to make trading decisions, if the stock market price is lower than the value that investors value, they should buy shares.

Why is stock valuation necessary?

Stock valuation is one of the important skills when investing in stocks. After pricing, you can decide to buy if the stock price is cheaper than its actual value, and possibly sell if the stock price is higher than its actual value. This is the basic principle for making profits when investing, buying, and selling stocks.

In many cases an investor cannot sell a stock at a price above or equal to its real value, we call it illiquidity.

How to apply stock valuation methods?

There is no universal formula that can value every company. Because each type of business, internal resources of the enterprise, each business cycle, etc. gives a different value. In addition, sometimes there are corporate stocks that cannot be valued.

Therefore, when investing in stocks, we should choose the right stock segments for us to value and invest in. At the same time, you also need to understand several different valuation methods so that you can flexibly apply them to different types of stocks.

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