Fundamental values

Fundamental values in a company are often defined as: Do they actually make money? Is there increasing turnover? Do they deliver profits? Or does the company have values like money or equipment? Fundamental values are often called intrinsic values.

When judging whether a company is priced according to fundamental values or pure speculation, there are many things you can consider this by.

It can be an advantage if you have insight and understanding regarding a specific sector or industry. By sector, its meant things such as oil & gas, gaming, healthcare, renewable energy, banking/finance, etc. If you have insight and understanding of what companies in a particular sector are doing, you can have an advantage over investors who only look at numbers or technical indicators.  The insight may be that you work in the industry, or just have an extra understanding of what the companies in this sector are doing.

Once you have decided which sectors you feel comfortable doing research and investing in, the next thing on the list may be to look for companies that are delivering solid earnings or are experiencing strong growth. Values such as P/E, increasing turnover, EPS, P/B, good margins, and results are factors you should familiarize yourself with if you want to find companies that deliver well on the fundamental front.

It is a well-known quote that says that you should buy shares in companies that supply products that you yourself thought are good and use a lot. As an example, these could be companies such as Cola, Apple, Microsoft, Netflix, HBO, Monster, etc. You have then invested in "safe" and reliable companies with good earnings, solid capital and ownership structure, fixed dividend payment, and a large user base. Such companies are often called: "Dividend Aristocrats"

Once you have gained a good insight into what fundamental values are, you're comfortable doing thorough research, have insight into a specific sector, then you can look for smaller and perhaps local companies to invest in. These should experience great growth both in earnings, sales, etc. You can then have the opportunity to be part of a larger journey in the company's history. There is always more risk involved when investing in small undervalued companies, but in some cases, it can lead to large gains over time.


You will find more about fundamental analysis, specific fundamental strategies, and factors for fundamentals  screeners  on the advanced pages, or by following these links:

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