Trading Growth & Value Stocks | James Boyd | 1-3-24
Characteristics and Risks of Standardized Options.

Does an investor have to be one or the other? Could an investor be both looking at fundamentals and technicals? How do you evaluate both when looking at a stock? Join our 8 week course on that very topic. Our sessions with be focus on application of material from our online course. Join us!

You’ve heard about growth stocks and value stocks, but what’s the difference?  What routines and guidelines should you consider as a self-directed trader or investor?  Join this weekly webcast series to learn how to identify the differences between growth and value stocks, create a stock watch list, and discover resources to find and analyze stocks. Set up routines that can help you allocate, build, and manage a stock portfolio.  Explore different techniques many traders and investors use to enter and exit stock positions.  Discover risk management techniques that typically help investors overcome their fears of taking that first step.  A new piece will be added each week and you can watch live or on-demand.
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Options involve risks and are not suitable for all investors. Please read the Characteristics and Risks of Standardized Options carefully before trading.

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Lesson #1 – Know the Intrinsic Value | Trading Growth & Value Stocks

In the world of stock trading, understanding the intrinsic value of a stock is crucial to making informed investment decisions. Whether you are interested in trading growth stocks or value stocks, knowing the intrinsic value can help you identify potential opportunities and avoid overpaying for a stock.

What is intrinsic value? In simple terms, intrinsic value represents the true worth of a stock, considering its underlying fundamentals such as earnings, cash flow, and growth prospects. It is different from the market price, which is determined by supply and demand dynamics in the stock market. By calculating the intrinsic value of a stock, you can determine whether it is undervalued, overvalued, or fairly priced.

When it comes to trading growth stocks, investors are typically looking for companies that exhibit strong earnings growth potential. These companies often have high price-to-earnings (P/E) ratios, reflecting investor optimism about their future prospects. While growth stocks can be lucrative investments, they can also be volatile and prone to sharp price swings. Therefore, understanding the intrinsic value of a growth stock is essential to avoid overpaying for future growth potential.

On the other hand, trading value stocks involves identifying companies that are undervalued by the market. These companies may have solid fundamentals and stable earnings but are overlooked by investors for various reasons. By calculating the intrinsic value of a value stock, you can determine whether there is an opportunity to buy the stock at a discount to its true worth.

To calculate the intrinsic value of a stock, investors often use various valuation methods such as discounted cash flow (DCF), price-to-earnings (P/E) multiples, and price-to-book (P/B) ratios. These methods involve analyzing the company’s financial statements, earnings forecasts, and comparing the stock’s valuation to its peers in the industry.

In conclusion, understanding the intrinsic value of a stock is a fundamental lesson for investors interested in trading growth and value stocks. By knowing the true worth of a stock, you can make informed investment decisions, identify opportunities, and avoid overpaying for a stock. Whether you are a novice investor or an experienced trader, incorporating the concept of intrinsic value into your stock analysis can help you achieve success in the stock market.