With the Premium Membership you get access to the Fair Value database. There are currently 50,000 shares in this database, including 12,000 shares with fair value and 1,700 with fair value higher than the current market price. You can use the Premium Dashboard to find these stocks. You will receive the access data to the Premium Dashboard by paying for the Premium membership. The Premium Dashboard consists of the following tools:
In the watchlist of the premium dashboard, you can add stocks to the watchlist both from the filter search and from the respective stock subpage. Here, the fair value and the respective market prices are constantly updated so that you have an overview of your fair value shares:
If a share slips too low, the fair value changes or a share rises too high in your watchlist, you will receive email alerts to notify you of a possible change:
The Portfolio Manager automatically assesses your stocks added to the watchlist and gives you recommendations on what type of stocks you should add to achieve a better distribution (diversification) of your portfolio:
The more requirements you meet, the fuller the bar becomes. You should invest at least 1000 Euro in one share and rather hold more than fewer shares, since the fair value effect can best be exploited on a broad basis. The more shares you have in your watchlist, the more evenly the shares approach their intrinsic value.
The holding period should be several years, as it can take a long time to reach its intrinsic value and financial crises may have to be addressed. Keep some money on the sideline to buy stocks in a crisis when stock prices get low!
On the homepage of the premium dashboard you will find the small screener, which shows a small preview of Fair Value shares in the region entered. Click on "Show more fairvalue stocks and advanced search" to open the larger stock screener. Here you can use additional filters to find fair value stocks.
Here you can set how many stocks you want to list and how you want these stocks sorted. You can also add shares to the watchlist from here or click on the name of the share and you will be taken to the subpage of the stock, which shows further details about this stock.
On each stock subpage you will find further important information that you can use to find the intrinsic value of the share. In addition to the automatically calculated fair value, you will find fundamental key figures and a possible industry comparison to make a comparison with competing companies:
These fundamental key figures are available on the subpage of the stock. In this picture you can see the key figures with the industry comparison. To compare the stock with an industry, you must first find out the industry of the stock and then choose the industry. The key figures will then turn green or red depending on whether the company is doing better or worse than the industry average.
In addition, you have small information bubbles available that explain which key figure means what. In the example in the picture you can see that the stock is convincing over its entire length. Every fundamental key figure is higher than the industry average.
Only the fair value ist too low to be interesting for an investment. From here you can also add stocks to your watchlist.
On the bottom of the stock you will find the crucial information whether a stock is undervalued or not. The sum of the information enables you to quickly, easily and efficiently estimate whether a stock is a bargain or too expensive. In the following steps, we show how to correctly interpret each piece of information and how we get the numbers:
The most important information on the subpage of the stock is the calculated fair value and the gap to the current stock price. The fair value is calculated using an algorithm that processes the fundamental key figures. The more key figures are available and incorporated into the algorithm, the higher the specified accuracy.
A 3 star fair value is only created if all key figures look good. If this is higher than the exchange price, this is expressed by a green tick. Here the probability is high that it is an undervalued stock. There are currently 1700 3-star shares with a higher fair value in the database than the current market price.
After the fair value is automatically determined by the various key figures, the fair value also receives surcharges and discounts for certain properties. If a stock has gone well in the past, it receives a premium of 20% and vice versa.
So you should rather look for 3-star fair values, since these process all key figures and are more accurate than 1-star ratings. Although these serve as orientation, they can also deviate significantly from the actual value of the company.
The better the individual key figures, the higher the fair value. The basis for this system are studies and internal tests, which confirm that the fair value price is highly informative about the actual value of the share.
It also shows that higher fair values bring more returns than lower fair values. It is advisable to invest in shares that have a fairly higher fair value than the current market price.
The accuracy indicates how many key figures are included in the calculation of the fair value. A 3 star rating indicates that all key figures are taken into account. A 2 star rating shows that 1 key figure is inappropriate and that this is replaced by an average value from previous years. Here, for example, one-year outliers can distort the result. A 1 star rating means that only 1-3 key figures are used to determine the fair value. This is the case if some values are negative or there is less data and the exact fair value cannot be determined.
In principle, you should follow the 3 star ratings and also assess yourself how constant the individual fundamental indicators appear.
For a fair value that is, for example, 800% above the current stock exchange price, a look at the specified key figures is recommended. This would check whether a key figure is abnormally high, which could result from special effects. Then you could call up the historical key figures on other financial portals such as Yahoo Finance to check the data for correctness firstly and secondly to estimate whether the specified values were so high in the past.
The fair values of companies that grow harmoniously and have no outliers in the fundamental data are in principle easier to assess than stocks with strongly fluctuating fundamental key figures.
If you are a beginner, you should look for stocks that constantly increase profit and turnover and have no outliers, special effects or abnormalities, since the fair value is even more accurate here.
To find stocks with constant growth and no outliers, you can take a look at the charts on the subpage of the stocks:
The two pictures above show a harmonious share without outliers, which is growing steadily. One should be on the lookout for such stocks, as the fair value can also be reliably determined here. There are no outliers that could distort the fair value. The data also appear to be correct, since the individual fundamental indicators behave normally, all are positive and in a normal range.
An example of a possibly distorted share would be the diagrams of such a share:
Although the fair value actively eliminates such outliers by calculating medians and geometric means, it is much more difficult to estimate the future key figures here than for harmoniously growing stocks. Even with 3-star accuracy, this can lead to the fact that some stocks have a very high fair value, but there may be a certain risk of bias. Therefore, such stocks would require a much more intensive additional analysis and should rather be bought by users who also understand why the outliers arose.
But not only the look at the diagrams reveals whether the fair value is reliable and therefore the stock is undervalued. A review of the fundamental key figures also enables a quick analysis of the share:
Fundamental key figures such as in this picture also show a harmonious share. You can see that the debt is not too high, the cash flow and profit are constant, the book value also seems positive and normal and good growth figures.
For example, if the cash flow were 200 or the return on equity 200 or the book value negative, you should take a closer look at the stock and try to understand why the individual values are unnaturally high. Here too, the key figures for calculating the fair value are set certain framework limits in order to harmonize outliers. 900% debt and a negative return on equity and / or book value could indicate that the company is over-indebted and has serious financial problems. In this case, a red call sign would appear to indicate a possible financial shortage.
In our example from the picture, everything looks normal. To get a feel for what "normal" fundamental metrics are, you can also look at several other stocks and assess what their metrics look like. In general, too high or too low fundamental key figures are always a warning.
Normal values for the fundamental key figures differ from branch to branch and are therefore difficult to formulate. But in principle one would have to take a closer look at the fundamental situation of the company with the following limit values:
Another possible indication of the health of the fundamental data is the possible industry comparison.
A special long-term average is calculated for the growth figures, which smooth outliers. The annual EPS and revenue growth rates are calculated in more detail. The median and the geometric average can be calculated from these growth numbers. The arithmetic average of the geometric mean and median of the data series gives the respective growth number. As a result, the growth is also cleared of outliers and is more meaningful than the conventional normal arithmetic mean.
To assess the historical performance of the share, you can load the historical performance of the share on each subpage of the share. By clicking on "Load graph" the historical share price trend loads.
Here you should select stocks that have an increasing price trend. Studies show that stocks that have risen in the past are more likely to go up in the future. So you tend to buy stocks that went well. The performance of the share is already included in the fair value. If the stock has performed better than the market as a whole, the fair value receives a maximum of 20 percent premium and a maximum discount of 40%. This is to prevent falling knives from being caught.
Here are the most important points that you have to consider if you want to use the Fair Value Calculator and the associated Premium Dashboard to find undervalued Fair Value stocks:
Disclaimers: fairvalue-calculator.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on fairvalue-calculator.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The experts may buy and sell securities before and after any particular article and report and information herein is published, with respect to the securities discussed in any article and report posted herein. In no event shall fairvalue-calculator.com be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on fairvalue-calculator.com, or relating to the use of, or inability to use, fairvalue-calculator.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. With the Use of the Portfolio Manager you don´t actually buy stocks with real money. You just get the Information of how a stock portfolio could be compiled. To follow the instructions on this side is no guarantee for success on the stock market. Stock investments are risky and can cause financial damage or lead to money losses.