/biz/ - Business & Finance

>>11283782
These are methods that I've developed myself, wish I could point to some source to help out but there isn't anything that I've seen that lines up with my own thoughts.

>Average trend line
If the graph shows the line going in this direction: / (in general with some big dips spread out).
Good example is WIX, press the one year button to see. There are points where it dips:
https://www.google.com/search?rlz=1C1CHBF_enUS721US721&q=NASDAQ:WIX&stick=H4sIAAAAAAAAAONgecRozi3w8sc9YSm9SWtOXmPU4OIKzsgvd80rySypFJLiYoOyBKT4uHj00_UNK9NN0pJzjEx4ACNsbYs8AAAA&sa=X&ved=2ahUKEwjD1oTz5erdAhUQTKwKHav5BWwQsRUwHXoECAYQHA&biw=2304&bih=1131

>Overvalue
Yeah, I like to look at P/E. My gut told me that Stichfix was too high of a market cap compared to what I'd imagine their possible income to be. So even though Montlyfool had them as a buy on their website, I didn't want to get into it. Especially what happened to me after buying Micron ($MU). Glad I got out of MU by the way.

Tech tends to have a very high price / earning, but that seems to be the norm, at least for now, in that sector. Another reason not to trust the tech stocks for the long terms.

But you can also find an undervalued company with a similar method. What you do is you find a smallcap (1.5 billion to ~3.5 billion) technology based service company, look at their P/E, and compare their marketcap to their more established competition in that field.

If they appear to offer services that are on the same level as a competitor with a high market cap for that field (33 billion for tech service sector to be a more established company), then you can assume that the prospective company may very well be undervalued. Consider that one point in it's favor. Of course, also look at the prince to earnings report. It's not uncommon for companies to be lose money per share, especially when they start out. Just make sure it's close to the $0 per share range, maybe at most losing $0.16.
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