Investments....

[B120WNY]

I'm new to the investment world, but have opened up a share dealer account with my bank, Halifax. I currently stick away £100 a month into a savings account, but I'm now looking to add £100 worth of shares every month into my portfolio, looking long term. I rarely have the need to delve into my savings and will be looking for some shares to make a good return in the long term.

I've been looking at a site called .... www.valuecruncher.com to value a companys shares. It uses the discounted cashflow approach. Is this a good way of doing it ?

Loads of "experts" and sites to look at but I'm looking at what the invest in. Any thoughts on the website or any other good ways to look at a companys value?

Thanks in advance ! :-)

Edited by B120WNY on Monday 15th June 17:22

[ShadownINja]

Nice first post. Welcome to PH.

There are dozens of ways of valuing a business. You could compare P:E ratios to the ones for the industry overall (see your copy of today's FT), for instance.

-Darren

PS What's an Im?

[shamrock]

B120WNY said:

I've been looking at a site called .... www.valuecruncher.com to value a companys shares. It uses the discounted cashflow approach. Is this a good way of doing it ?

Edited by B120WNY on Monday 15th June 17:22

It is one way of doing it but it relies upon knowing future cashflow of a business. It can be difficult to select an appropriate cost of capital and estimates of future cash are unreliable. I'd be surprised at seeing multiple companies valued using this method as it is more suited to internal investments and acquisitions.

Dividend Valuation Model and P/E Ratio are more appropriate methods for share valuation but have their drawbacks too.

Ideally you would want to use a number of valuation techniques to identify the range and then value depending on the risk of the business and your appetite for risk.