fellipecouto96 / stocks-best-price

How to discovery the best price to buy stocks?

How to calculate Intrinsic Value?

To find the stocks that even Graham would buy, we will use the Intrinsic Value formula presented in the book The Intelligent Investor. In summary, Graham believed that there was a fair value to be paid for a company's shares and that from time to time the market became irrational and missed this fair value.

Benjamin paid at most 15 times for a company's profit, and 1.5 times for its equity, thus: P/L: 15 and P/VP: 1.5. Thus, to calculate the Intrinsic Value of a company he used the following formula: VI = √22.5 x EPS x EPS. Where VI is the Intrinsic Value, EPS is the Earnings per Share and finally, EPS is the Equity Value per Share. The number 22.5, on the other hand, is the so-called Graham Index obtained by multiplying 15x the EPS and 1.5x the PVP, i.e.: 15 x 1.5 = 22.5.

This software helps you find the fair price of the stock.