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Strategies & Market Trends : Stock Watcher's Thread / Pix of the Week (POW)
VEEV 296.96-0.7%Nov 12 3:59 PM EST
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To: Stock Watcher who wrote (2520)2/9/1999 11:02:00 PM
From: Dave Gore  Read Replies (1) of 52051
 
SW---thought some might appreciate being alerted to MARKET CAPITALIZATION and how it helps you determine Fair Market Value.

Some of you may not be taking Market Cap. into account when trying to figure out what a stock should sell for. You may look at the Float numbers and maybe the Outstanding shares but that is about it.

Well, you should be looking at Market Cap, which is just a math problem.

Shares Outstanding x current stock price = Market Capitalization

It often explains why one stock is trading at a higher level than another. You may say that stock A trading at $1.00 should be trading at $4.00 like Stock B. You may think "it is undervalued" because it has about the same sales in the same industry.

Maybe, maybe not. Have you looked at the Market Cap comparisons?

One of the reasons that I like SYCD is that it's market cap is only about $2.5 million. That is dirt cheap when I compare it to other stocks in a similar area. Even stocks that sell for less, say 15-20 cents.

That's because they have way more shares outstanding like 50 million, so that when you multiply 50 million times 20 cents, you get a Market Capitalization of $10 million versus $2.5 million for SYCD.

That means that SYCD actually is grossly undervalued by as much as 4 times when compared to the other stock.

I hope you guys do this extra math step when trying to figure out if a stock is undervalued or not.
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