Post by
ScarletSpider on Nov 21, 2019 6:47am
Price to Book Ratio
I have read in the past that value investors look for stocks that are around 2 on the price to book ratio. The way this ratio works for a quick and dirty assessment of whether to invest in a stock is the lower the value the more undervalued it is which may imply things are being manipulated. Mcld is one such stock that I have no doubt is being heavily manipulated down as it is a negative 14.83. A write up on the ratio says these are the stocks which should be on investors top of the list...I dont mean to plug mcld here it was the first example and only one I know of right now on a very extreme end...over here this is about a 1.5 or something so it is definitely undervalued and no doubt there has constantly been volatility. Just keep an eye on this tool that is part of many others that when taken together can definitely help you pick stocks to first take a position in...price to earnings is another and if I am remembering correctly it is based on how many dollars investors are willing to pay for each dollar a company makes...I see ridiculous amounts on this ratio...I personally wouldn't want to pay more than 3 however I have seen stocks which trade consistently high with people supposedly paying up to 20 times or more but then again when people use the multiplier on companies' revenues they can calculate typically at a 15-25 times basis which is high but no doubt people who hold shares and who bought fairly low like this because the share value will be very high. I think it is faulty to use this as a measure a more accurate way is to base it on earnings per share divided by the total outstandings however many people go along with the stupid practice of multiplying high on revenue and so most stocks nearly all based on sentiments are likely overbloated and just overvalued...if you see that time to take some cash off the table as eventually when all the manipulators who are surely manipulating shares up will dump them off and then the price typically plummets. I would be extremely careful of pennies that trade above a buck with very little revenue time and time again I have seen them run to crazy amounts and then get nailed after which when they get nailed badly after the Cinderella story ends they have a very tough time recovering back to even half way if not go bust...be careful with these but if you take some profit on 20 to 33 percent of what you hold no problems goes up you lose a portion of your holdings as a safety throw to cover the possibility of pull backs it starts crashing you wait avoid catching a falling knife for when it bottoms and buy again if the long term picture looks solid...pennies is all sheer gambling but the more tools and knowledge along with tactics can tip the game more in our favor. Anyway this is good value right now and I will not say much about the price being badly manipulated down it isnt but still undervalued and good to buy now...company needs to finish tastings and start getting more sales...buy and hold is where this one no doubt is at and really has been