How To Identify Whether A Stock Is Cheap Or Expensive?
We always been advised to buy undervalued stock. But how can we know whether a stock listed is undervalued/ cheap? Is there any formula involved? Any example? The potential of stock in future is not here for discussion.
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Answer by jeff
The price to earnings ratio is a good indicator. This is a comparison to how much money the stock makes compared to its price per share. You can compare it to similar companies in the same industry and see how it stacks up.
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