Wealth Creation with the best stocks at fair value
The US Federal Reserve has sounded the bugle on inflation and central banks around the world will soon follow suit. Years of easy money available at low-interest rates will now be a thing of the past. Rate hikes are now priced in as a high probability scenario at almost every alternate meet (something which was unheard of since the great financial crisis) and in such a volatile interest rate scenario, investors often tend to wonder how to find the best stocks to invest in and what should be the fair value. We at Fairvalue Calculator have just the solution for you.
Growth Investing Vs. Value Investing:
This is an endless debate, similar to the lines of Pepsi vs. Coke, Pizza Hut vs. Dominos, and Android vs. Apple. However, while the latter debates might be subjective and difficult to determine a conclusive victory based on objective evidence, in the matter of growth investing vs. value investing, each group claims victory based on data from a specific time period that the investing methodology outperformed in.
Thus, we as investors can come to a logical conclusion that growth and value investing strategies have cyclical performances and each will do well as a function of the cycle they are in. Growth investing tends to do well in a low-interest rate, high-money supply environment as liquidity chases growth at any price leading to an outperformance of high-growth stocks. Growth, however, tends to underperform in high inflationary environments, similar to the one we are in now, overshadowed by value investing which thrives in high inflation.
The last decade belonged to growth investing. The coming one will belong to value investing. You as an investor need to be adequately prepared to invest in the best stocks at fair value and we at Fair Value Calculator can help you do just that. It must also be taken into account that value investing appears to underperform in low-interest-rate environments. The nature of value investing allows the investor to accumulate a decent size position in the best stocks at fair value before they take off. Years of returns are made in months and that patience is also what the fair value calculator helps with.
A look at value investing in the last decade
Spouting stuff that is commonly available is all good and fine but nothing beats experience, even in investing. The fundamental proof of the success of value investing can be easily determined by the value picks of various value investors and I am not speaking of the famous names of Benjamin Graham or Warren Buffett but the low-key everyday investors. To showcase the power of value investing, we go back a decade to 2013 and make a list of all value investing picks published online by our everyday investors. (Some of the websites referred to include seekingalpha and moneyshow).
Now the list will be extensive and one cannot create a portfolio of all the stocks in the list. However, one can select the best stocks which are available at fair value simply by doing a frequency analysis. How many recommendations had the same security name? If you are referring to 10 different recommendations, at least 5 of these recommendations should have the security name to be included in the portfolio. Another thing to be noted is that like all portfolios, some stocks do well (the best stocks acquired at fair value) but a lot more don’t do as well. However, the beauty of value investing is that the stocks that do well make up for all the stocks that did not do well. The stocks that did perform still enhance portfolio returns by virtue of constant dividends. Most value picks will give out dividends and will have high dividend yields. For the sake of brevity and to make the point, we shall share two most popular names today which were hitherto not that known but were deemed value picks by the experts around 2013.
Blackrock is an American multinational investment company based in New York City, USA. It is amongst the world’s largest asset managers, often ascending the throne of the world’s largest asset manager from time to time. The share price on May 31, 2013, was $279. A high price in absolute terms, but in value terms, it was quite cheap. It was yet to achieve the title of the world’s largest asset manager (which it did in 2014) but even at that time, company fundamentals remained cheap.
The company was quite dominant in the fixed-income space and would soon grow into the equity space. Markets looked weak and were beginning to display signs of the Taper Tantrum (The Federal Reserve signaling the withdrawal of quantitative easing). However seeing the reaction of the markets, the Fed decided against the withdrawal which saw equity markets reach new highs and thus improve the assets under management for Blackrock.
It traded at a PE of 15, with earnings growing at more than 15%. The cherry on the cake was that Blackrock paid consistent dividends each quarter and the annualized yield on the dividend was a consistent 3%. A 3% dividend yield in an interest rate environment near 0% is similar to its having a dividend yield of 15% now that interest rates are at 5%. The stock price has since tripled to $660 and it trades at a PE of 20 which might be on the pricier side, but compared to its fair value, still cheap.
The Fair Value calculator helps you select the best stocks trading at fair value and they would have recommended Blackrock at that time. They still do.
Blackrock had assets under management of $3.7 trillion in 2013. They are now well over $9 trillion and are expecting to cross $15 trillion in five years’ time. Hey, it’s not me that am saying this but the experts themselves. It is an excellent value pick and fair value calculator could have easily helped you discover this at fair value in your journey of finding the best stocks.
Take-Two Interactive Inc.:
Take-Two Interactive Inc. might not be a well-known name amongst most adults, but it is a well-known name among kids and teenagers. It goes to show that sometimes the best stocks can be found in your kid’s toy box, most often at a fair value. (Wink, Wink: Mattel). In this case, the toy box is electronic and so is the toy. The company is an entertainment publishing label primarily into video games with game franchises like the popular Grand Theft Auto (GTA) series, Bioshock, and Borderlands amongst others.
2013 marked a turning point for the company. The company was trading at a stock price of $17 and a P/E of 13, extremely cheap. The company was about to publish Grand Theft Auto V, the fifth game in their famous grand theft auto series. It was a value pick, trading at such low valuations, especially when a game in the popular series was about to launch.
The game became immensely popular crossing $1 billion in sales and has been making money for the company to date. In fact, Take-Two makes 58% of its money from online microtransactions and DLC. The company spun a simple game launch into a decadal money-making machine. The stock price is now around $139, almost 9x in 10 years.
It is still undervalued as per the fair value calculator and it has declared its intention of publishing Grand Theft Auto VI soon. The fair value calculator will give you all the requisite information so you can make the choice of the best stocks at their fair value.
How Does Fairvalue Calculator Help?
The fair value calculator contains an exhaustive database of the fair value of the best stocks from around the world. You start off with the market analysis giving you the total number of stocks the website scans and the number of undervalued stocks currently available. The fair value of all the 46,500+ stocks is available on the website. It also judges the market average fair value and determines the amount of cash one should hold in their portfolio in order to diversify as well as deploy during price corrections.
The market watch dial gives you a quick glance at current market positioning. Users can check this once every week and if the market watch is found to be on either extreme, take corrective action with their portfolio immediately. (Deploy money when the market watch is cheap, sell a portfolio or take protective measures when the market watch is expensive. Historical market watch data is also available to get a feel of the trend and the direction the market is beginning to take.
Finally, in the market analysis segment, the fair value calculator calculates the fair value of various indices around the world and compares it with their current prices. Investors looking to construct their portfolios from Exchange Traded Funds tracking these indices can make use of these tools to better shape their ETF portfolios as well as look deeper into the countries and companies represented by the index.
Fair Value calculator is a deep analysis tool with drill-down facilities to satisfy every investigative urge. A sector analysis allows users to figure out the undervalued sectors which will have the best stocks trading at fair value.
The best portfolio manager:
The best feature of the fair value calculator is the ability to transform you, our esteemed user into your own personal portfolio manager. Even better, it will bring you on par with the professionals, at an infinitesimally lower cost. Most investors do not have the time to manage their own portfolios. They entrust that responsibility to a professional portfolio manager who either makes money via fees charged for managing that portfolio or via distribution commission earned by selling expensive funds or poor, pump and dump companies. You as our esteemed user, simply by taking our membership have separated yourself from the herd and in markets, and in life; the winners are the ones who brave it out alone, away from the herd.
Fair Value Calculator eliminates all of the portfolio manager problems plaguing you. As a premium member, you can be your own portfolio manager. The website has a selection of categories available with a list of securities in each to choose from.
It offers guided suggestions on the kind of securities one must add to construct a well-rounded, fair-value portfolio of the best stocks.
A sample portfolio constructed looks like below:
Fairvalue calculator also offers current market reports as well as hot news so the trader in you can capture the current hot stock and capitalize on the news-based trading opportunity.
Finally, we at fairvalue calculator publish research reports from time to time. You will find industry and stock-specific research reports, curated by our owner and star portfolio manager, Mr. Peter Klein whenever an amazing investment opportunity arises. It allows our users an insight into the mind that went into creating this website and its utilities and enables them to apply that thinking to their own investments as well.
In life, as in investments, we want to make investments and take bets that have limited downside but unlimited upside. The premium membership of Fairvalue Calculator is one such bet. The downside, should you not be satisfied is the price of a couple of cups of coffee. The upside should you choose to experience it, is freedom; Freedom to be your own portfolio manager; Freedom to make your own wealth creation decisions; Freedom to invest your way and save time in the process. Now that is a bet, worth taking, an investment, worth making.