Undervalued Stocks

wmb194

Voyager2002 said:

For an example of an undervalued share that fell further, look at Evofem (EVFM). I watched it for a while, then when the price fell and I felt it was undervalued I invested. Rinse and repeat: I spent a total of USD8,000 buying shares in this company.

When I checked this morning, my stake was worth an incredible USD3.94!

What in your view made it undervalued? A quick look suggests it is/was a speculative biotech company that hasn't made a profit for years and years (ever?). Personally, I look for what look like undervalued, reliable cash flows from profitable companies rather than speculatively undervalued cash flows because that's hard to do...

Voyager2002

https://forums.moneysavingexpert.com/discussion/comment/80026518#Comment_80026518

Fair comment.

Initially it had a bright idea for a new product and a team who looked as if they were able to bring that product to market. I noted the share price (p1) but did not buy.

Fast forward: the new product was working, approved by regulators and there were some real sales. The share price was now a fair bit lower than p1, although since a number of the risks that were obvious when I first looked at the company had now been eliminated, the share price should reasonably have been somewhat higher. That is why I described it as undervalued.

steampowered

You cannot say that a particular stock is "overvalued" or "undervalued".

Stocks are publicly traded, so the value represents what investors in the market think it is worth. You can only say if they were right or wrong with hindsight.

As they say - hindsight is always 20/20 !!!

wmb194

https://forums.moneysavingexpert.com/discussion/comment/80028045#Comment_80028045

The thing is, the market's regularly wrong and you can bet against it.

Linton

https://forums.moneysavingexpert.com/discussion/comment/80028117#Comment_80028117

True, but most small private investors are likely to find that the market is right more often than they are. To rationally challenge the market price of a particular share you need a very good understanding of company finance in general, the fundamentals of your chosen investnent and the markets in which it operates.

wmb194

https://forums.moneysavingexpert.com/discussion/comment/80028779#Comment_80028779

Sure but you can bet against the market in aggregate as well e.g., I did well last year with a big overweight to the FTSE100 and UK equity income ITs/funds but yes, it does involve doing more work and having/obtaining more knowledge than most people will be willing to put in.

steampowered

https://forums.moneysavingexpert.com/discussion/comment/80028117#Comment_80028117

It's easy to say that the market is wrong with hindsight.

If you know in advance when the market is wrong, you can make billions trading stocks.

If you know where the market is wrong right now please do tell me !!!!