I dumped the 30 Dow components, which you can find here, into one of my spreadsheets I use for analyzing companies. One of the cells in that spreadsheet contains the consensus analyst target prices from the data provider FactSet. I then compared that value to the most recent closing price to come up with the "upside", which is simply the percentage gain that would be required to reach that estimate. Using that metric, here are the 10 most undervalued companies in the Dow according to these consensus estimates. And using the same analysis, here are the 10 most overvalued Dow components. Home Depot (NYSE: HD), at the top of this list, is currently 3.5% above the consensus target of analysts. Let me offer the caveat that sometimes analyst estimates are wrong. If they weren't, investing would be a piece of cake. We could just invest according to consensus targets and outperform the market. Nevertheless, they do offer some insight into Wall Street's thinking. Further, these will be the companies that brokers are recommending to clients, which can provide some uplift and some downside resistance. In other words, it's not the only consideration in picking a stock, but it's a good piece of information. An undervalued stock, heading into an economic recovery, could be your chance to catch lightning in a bottle. Editor's Note: Keep an eye out for an exciting offer from Investing Daily. It's "the next big thing" from our colleague Robert Rapier, chief investment strategist of Utility Forecaster. Up, down, sideways… even in the face of rising interest rates… tech selloffs… and anything else Mr. Market throws at you, Robert's trades "print money" like a machine. And because they throw off 3x to 20x more cash, you'll have the very same "secret weapon trading strategy" the genius traders at Goldman Sachs used to beat the S&P 500 eighteen years in a row, uninterrupted. Watch for details, soon. |
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