Undervalued Stocks and How to Identify Them
•By Mahersaham Team
Artikel ini juga tersedia dalam Bahasa Melayu
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The study of undervalued stocks is conducted through fundamental analysis. Research indicators for determining stock prices can be found in annual reports and klsescreener.com
You can carry out stock research strategies for long-term investing as an investor. Undervalued stocks can be thought of as shares that are priced cheaply and are suitable for purchase.
The meaning of undervalued stocks refers to shares whose current or market price is lower than their actual value. This indicates that undervalued stocks are fundamentally cheap and are priced below their target.
Based on fundamental analysis research, the search for undervalued stocks typically utilises several important indicators.
Among the indicators:
Using only the following indicators:
EPS is the earnings value per share for a company. The EPS value can be found in the annual report. A positive EPS value will attract the attention of investors looking for counters.
The PE ratio value refers to the current share price of the company and its EPS value.
Example: Share price of A = RM 10 & EPS value of share A = RM 1
Therefore, PE ratio of share A = RM 10 / RM 1
= RM 10
The PE ratio value for each sector listed on Bursa Malaysia varies. For example, a PE ratio of 10-15 indicates an undervalued stock.
This is an example of a website for those who wish to conduct stock research through fundamental analysis.
Undervalued stocks are shares that trade at a price lower than the company''s actual value based on fundamental analysis such as PE ratio and PB ratio.
You can identify undervalued stocks by analysing the PE ratio (for example, 10-15 is considered undervalued), PB ratio, and comparing the current share price with the company''s intrinsic value using data from annual reports and klsescreener.com.
Not necessarily. Some undervalued stocks may have underlying issues such as high debt or declining financial performance. Therefore, investors need to conduct thorough research before making investment decisions.
Undervalued stocks trade at a price lower than their actual value, whilst overvalued stocks trade at a price higher than their actual value. Both can be identified through ratio analysis.
Understanding the concept of undervalued stocks is an important step in stock investing. By using indicators such as PE ratio and PB ratio, you can make wiser investment decisions.
Want to start investing in stocks today? Open a CDS account with Mahersaham and receive professional investment guidance. Don''t forget to download the free stock basics ebook for a complete guide to starting from scratch!