WHAT IS STOCK VALUATION? NOTES WHEN VALUATION OF STOCKS

Stock valuation is a mandatory factor that any investor participating in the stock market must know. To be able to own potential investment portfolios with attractive rates of return, investors need to have the right plans and views on the stock market. So do you really understand the concept and how to value stocks?

What is stock valuation?

Stock valuation is an activity that helps stock investors determine the intrinsic value or true value of a stock.

It can be understood simply that stock valuation is the act of helping investors evaluate and determine the true value of a stock at the present time. From there, identify the market as well as the portfolio and make investment decisions.

What does stock valuation mean?

Stock valuation is very important when participating in stock investment. This is not only a decisive factor affecting investors, but can also directly affect the businesses that issue those shares. Therefore, it is necessary to value securities because:

- For businesses: Stock valuation is one of the important and necessary steps for a joint stock company when it wants to raise capital, offer shares or raise the businesss influence on the market stock

- For investors: Investors know which stocks are most profitable and worth buying through stock valuation. From there, it is possible to make trading decisions, if the stock market price is lower than the value that investors value, they should buy shares.

Investors should pay attention to some issues when valuing stocks as follows:

Understanding the factors that affect stock prices, the market price of stocks can be influenced by many different factors, specifically:

• State of political - economic development: The stock market price can be greatly influenced by impacts from the national economy, the world economy as well as the political situation at home and abroad. Normally, the stock market price tends to be proportional to the development of the economy. Understandably, the stock market price will tend to increase when the economy develops and vice versa, the price trend will decrease when the general economy goes down.

• Law of supply and demand in the market: A stock with high demand means that many people buy the stock, the price of that stock will tend to increase and vice versa.

• Financial statement from the company: If the growth rate and revenue are high along with the business results of the company, it is likely that the stock price of this company will continue to increase in the future. hybrid and vice versa.

• Investors psychology: Securities is a very sensitive market to information. As long as some disturbing information appears, it can affect the market and cause strong fluctuations. To be able to determine a good stock price, investors need to have a stable, calm mentality and select the correct information, from which they can make optimal and more accurate investment decisions. 

• There is no universal and exact formula for valuing each stock in the stock market. Because each business cycle, each type of business, future orientation, each macro condition, internal strength of the enterprise or investor capacity gives different judgments about the value of that stock. Therefore, sometimes there are cases where investors are not able to value the business.

Therefore, the appraisal of stock prices needs to find professional and reputable valuation companies in Vietnam. Indochina International Appraisal & Investment Joint Stock Company (INA) with 20 years of experience in the field of appraisal with an abundant data warehouse, a team of professional and highly qualified appraisal experts, a fast and strict appraisal process, minimizing appraisal costs... Besides, SUNVALUE service of INA will provide customers with information about the value of the business with high reliability for each appraisal purpose.