Streetsmart Guide to Valuing a Stock [Hardcover]

Gary Gray (Author), Patrick Cusatis (Author), J. Woolridge (Author)

Book Description

Series: Streetsmart Series | Publication Date: September 19, 2003

Traders and investors spend fortunes in time and money trying to gauge the real value of individual stocks. The Streetsmart Guide to Valuing a Stock introduces proven techniques for analyzing a stock's value, spotting undervalued and overvalued stocks, and understanding the impact of interest rate changes and earnings reports on stock prices. New topics include:

• Finance theory in the stock valuation process
• Short-term stock price versus long-term value
• Use of valuation models to uncover misstatements and outright fraud

Editorial Reviews

From the Back Cover

Read This Book--and Know What a Stock is Worth Before You Invest

Wall Street veterans know that the key to beating the stock market is to find, and buy, stocks trading at a discount to their true net worth. Yet, as recent events have proven, using the wrong valuation approach can be disastrous, often more dangerous than no approach at all.

Streetsmart Guide to Valuing a Stock, Second Edition, introduces you to a simple and powerful valuation model that will help you calculate the true value of any stock and pay pennies on the dollar for some of today's most valuable companies. Anchoring stock valuation by using 10 proven principles of finance to help you intelligently manage your investments, this latest addition to McGraw-Hill's popular Streetsmart series will:

• Show you the secrets to buying undervalued stocks and selling overvalued stocks
• Guide you in managing the risk of investing in stocks
• Demystify the often-confusing steps in the stock valuation process
• Help you differentiate between a stock's market price and its intrinsic value

The main reason that many investors consistently underperform the overall market is that, for the most part, they rely on "hot" tips and guesswork for their investment decisions. Let Streetsmart Guide to Valuing a Stock show you how to take the guesswork out of investing by knowing what you're buying--and always buying it at a discount.

"This book will make you a better informed, more intelligent, more profitable investor and will help you to understand why stocks such as Cisco trade at $14.45 and Berkshire Hathaway trade at $72,000 per share. Our valuation approach revolves around some very simple calculations that use only addition, subtraction, multiplication, and division--no calculus, differential equations or advanced math."

--From the Preface

Value and trust are two of the biggest question marks in today's tumultuous stock markets. Value because investors burned by the recent tech collapse are once again insisting that stocks provide some meat along with the sizzle, and trust because--for obvious reasons--investors don't know who to trust anymore.

Streetsmart Guide to Valuing a Stock shows you how to satisfy both of those question marks. This straightforward guide introduces you to accurate, trustworthy, and proven techniques for valuing any stock, then shows you how to determine whether that stock is undervalued or overvalued by an emotion-driven marketplace. Let it show you how to:

• Accurately value stocks using highly regarded, easy-to-use valuation methodologies
• Realize the greatest potential returns while reducing your exposure to risk
• Estimate important valuation concepts including growth, operating margin, and cost of capital
• Develop and use spreadsheets to dramatically improve your valuation speed and accuracy
• Locate and download all the valuation information you need at little or no expense
• Play different what-if games to see how changes in growth, profits, or interest rates affect a stock's value
• Test your knowledge using actual valuations of Citigroup, Berkshire Hathaway, and other high-profile stocks

As investors struggle to regain their footing--and rebuild their portfolios--after recent stock market fiascoes, they find themselves returning to the bedrock value principles of finance that have always been the true drivers of stock prices. Let Streetsmart Guide to Valuing a Stock introduce you to some of today's most trustworthy and accurate measures of value, and give you the knowledge you need to make your investment decisions based on numbers and reality--instead of smoke and mirrors.

About the Author

Gary Gray, Ph.D., is a professor of finance at Penn State University. A consultant to Wall Street investment banks, Dr. Gray was previously a managing director at Lehman Brothers. He contributes articles to a number of academic journals, including Harvard Business Review.

Patrick Cusatis, Ph.D., is a professor of finance at Penn State University at Harrisburg. Previously, he was a director with First Union Bank and vice president with Lehman Brothers. His articles have appeared in a number of academic journals, including the Journal of Financial Economics.

J. Randall Woolridge, Ph.D., is a chaired professor of finance at Penn State University. A former recipient of Penn State's Excellence in Teaching Award, Dr. Woolridge contributes articles to academic journals and has been highlighted in The Wall Street Journal and on CNN.

Product Details

• Hardcover: 288 pages
• Publisher: McGraw-Hill; 2 edition (September 19, 2003)
• Language: English
• ISBN-10: 0071416668
• ISBN-13: 978-0071416665
• Product Dimensions: 9.4 x 6.2 x 1.1 inches
• Shipping Weight: 1.2 pounds (View shipping rates and policies)
• Average Customer Review: 4.1 out of 5 stars  See all reviews (18 customer reviews)
• Amazon Best Sellers Rank: #878,307 in Books (See Top 100 in Books)

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Customer Reviews

Most Helpful Customer Reviews

13 of 13 people found the following review helpful:

5.0 out of 5 stars A serious approach to putting a dollar figure on the value, December 5, 1999

By 

J. Mercado (Florida) - See all my reviews
(REAL NAME)   

This review is from: Streetsmart Guide to Valuing A Stock: The Savvy Investor's Key to Beating the Market (Hardcover)

The methodology doesn't cover some industries (financial, insurance etc) but for the majority of companies this will come up with an intrisic value (not book value) of the future earnings discounted over time for inflation, risk etc. I made a spreadsheet that does the methodolgy the book teaches, but the author has one for sale. I wish I had the spreadsheet before reading it, as I had to reread sections to gain a good understanding after I had the spreadsheet. It allows you to follow along his examples and "see" the numbers and forecasts effect the valution. I will email my version to any interested parties. No instructions, bare bones, but works. You wont understand it without the book.

11 of 12 people found the following review helpful:

4.0 out of 5 stars Insightful!, June 1, 2001

By 

Rolf Dobelli "getAbstract" (Switzerland) - See all my reviews
(HALL OF FAME REVIEWER)    (TOP 500 REVIEWER)    (REAL NAME)   

This review is from: Streetsmart Guide to Valuing A Stock: The Savvy Investor's Key to Beating the Market (Hardcover)

Everything you need to know about how to value a stock is inside this book - somewhere. Finding it however, can be a problem, as it sometimes seems that the editors used the random dart theory of selection in putting together the chapters. For example, in order to understand the concepts presented in Chapter two, you need information that is contained in Chapters three and five. Once you figure out how to navigate it, though, this book is a valuable resource and a powerful educational tool for investors from neophyte to intermediate. It's encyclopedic in its scope, and the pages in the included glossary are sure to become dog-eared from use. We [...] recommend this book to investors of all levels. Beginners will learn critical concepts and terms, while more experienced investors will come to rely on this book as a trusted reference companion.

7 of 7 people found the following review helpful:

5.0 out of 5 stars Outstanding in Every Respect, August 2, 1999

By A Customer

This review is from: Streetsmart Guide to Valuing A Stock: The Savvy Investor's Key to Beating the Market (Hardcover)

One of the best investment valuation books ever written. This book is clear enough for the novice, but contains enough depth to please corporate finance and valuation afficionados who are fans of Copeland, Rappaport, Stewart and Damodaran. The software on the authors' website, Valuepro, is every bit as good as the book and is a must for anyone interested in trying his hand at valuation. The authors also go out of their way to support their product with an excellent message board on the website. This is one of my favorite books.