Scott Tominaga: How to Identify Undervalued Stocks?

 

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Scott Tominaga: How to Spot an Affordable Stock?

Stock investing can be a bit of a gamble. Everyone's heard the adage to "buy low and sell high," but it's easier said than done. Thousands of people worldwide — from seasoned professionals to part-time day traders — are trying to figure out how to make the most of their investments and turn a profit. But how do they identify undervalued stocks? 

It takes a bit of research and analysis, along with a healthy dose of intuition. Investors look at various factors to determine whether a stock is worth buying or selling, including the company's financial health, competitive landscape, and overall growth potential. It's all about weighing the risks and rewards and making informed decisions.

Since undervalued stocks can come from any company and industry, finding them at the right time to profit from them can be tricky. Here are a few tips from Scott Tominaga on how to find them.

Stick with what you know.

To begin with, finding undervalued stocks relies partly on accurately valuing the stock, says Scott Tominaga. If you don't know much about the company or industry, it'll be almost impossible to value the stock accurately.

For example, if you don't know anything about the food industry, you'll probably lack the knowledge to know if that niche restaurant company has a bright or dim future. And you'll probably need at least some financial sector knowledge before evaluating that regional bank.

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Dig into the company.

For many reasons, a company's share price can differ from its intrinsic value. And many of those reasons aren't easily quantifiable.

Scott Tominaga suggests that you go beyond math. Dig into the company, the industry, the headlines, and the employees. All of these can provide crucial information for valuing a company.

For example, if people within a company are buying up some of its stock, that could be a sign that they think it has a lot of value. They usually know better than people looking from the outside in. On the other hand, if everyone is selling shares — that could be a sign that there's trouble coming.

Scott Tominaga is the Chief Operating Officer of PartnersAdmin LLC, a company established to provide a quality, outsourced solution to meet the dynamic back-office needs of the alternative funds industry. Check out this blog for more articles on business and finance.