FAQ
Way Undervalued
  Finding undervalued stocks

Frequently Asked Questions

Can WayUndervalued.com suggest companies that are overvalued so I can short them?

"Way overvalued" companies are also available by looking at the opposite end of the "Way Undervalued" calculation, but I currently have no plans to post this information on the web site.  I don't recommend betting against American prosperity - it's a bad bet.

 

How does past history impact the Way Undervalued calculation?

Past stock performance is ignored.  Some Way Undervalued companies have gone down recently.  Other Way Undervalued companies may have recently doubled in price, yet they are also Way Undervalued.  Past stock performance has no impact on the Way Undervalued calculation.

 

How do I know which Way Undervalued stocks to consider buying?

That's up to you.  Additional filters can be applied to Way Undervalued stocks to identify small cap, mid cap, or large cap companies to narrow the list for a particular investor.  You have no business buying a Way Undervalued company if you don't fully understand what the company does and the risks involved.

 

Can I get rich quick buying Way Undervalued companies?

No, it won't happen.  Invest for the long term.

 

Is the creator of this web site an expert stockbroker, financial advisor, or investment professional?

Nope.  I've been investing my own play and real money since the late 1990's.  Riding the dot-com bubble and real estate bubble doesn't make me an expert.  I created WayUndervalued.com over the past few years in an attempt to find a non-emotional way to identify undervalued stocks.  I successfully use this method in my own stock trading and thought I'd share it with the world.

 

Which stocks have you purchased using the WayUndervalued method?

If I own (or don't own) a company listed on the web site, it is disclosed on the company analysis or results page.

 

How much should I invest in a Way Undervalued company?

You should invest using play money before using any real money.  If you invest with real money, don't invest this month's rent money.  Don't invest money you need this year.  Don't invest money you need this decade!  And most importantly, don't invest real money that you can't afford to lose.

 

How long does it take a Way Undervalued stock to go up?
When do I sell a Way Undervalued stock?
How long should I hold a Way Undervalued stock?

Each company identified as Way Undervalued will include a target price range.  The target price range could change weekly either up or down!  Check back frequently to see if your companies future earnings estimates have been revised up or down.  The decision of when to sell is ultimately up to each investor, but expect to hold Way Undervalued stocks for at least 12 months or until one of the following occurs:

  • The stock price goes up significantly, making the stock no longer undervalued
  • Future earnings change significantly, making the stock no longer undervalued
  • You can't sleep at night with it in your portfolio

 

Can you notify me when a stock loses WayUndervalued status or reaches its target price range?

WayUndervalued.com doesn't do this today, but this feature might be added in the future if enough people request it.  For now you can use other websites to create alerts, although you would still need to periodically check WayUndervalued.com to see the updated status of a company for earnings changes, etc.

 

Couldn't I get the same information from a stock screener?

You may find some of the companies listed here using other websites or stock screeners to identify undervalued stocks.  But you won't find anything that ranks these companies like WayUndervalued.com does.

 

Are undervalued stocks identified on this website value stocks or growth stocks?

Usually stocks on this web site are considered value stocks.  But, growth stocks could also appear based on expected future earnings.

 

How are 5,000+ companies sorted to identify Way Undervalued companies?

It all started with a spreadsheet containing a list of companies with columns for P/E ratios, past earnings, and future years earnings.  At first, I entered the information manually.  Then, I began importing the data into the spreadsheet using publicly available APIs rather than looking up each data point manually.  Now, I update the P/E ratios once every few months, and update the earnings estimates every couple weeks.  The result is an up-to-date list of over 5,000 companies sorted to show companies that are Way Undervalued.

 

What's so magic about the algorithm used on this website?

This website uses information publicly available to everyone.  You could spend time identifying a handful of undervalued companies by sifting through thousands of companies on your own.  Here, the work is done for you.

 

Will some stocks that are way undervalued go down in price?

It's possible.  Appearance on the undervalued or way undervalued radar is no guarantee that the stock will go up.

 

How should I use the information provided on this web site to help me select stocks that will beat the market?

The goal of this web site is to help you identify potentially undervalued stocks.  It's up to you to decide if these stocks meet your investment objectives.  Inexperienced investors should invest using play money before risking their own real money in undervalued or WayUndervalued stocks.

 

How do I invest using play money? 

There are lots of websites that let you invest using play money.  Buying WayUndervalued stocks with play money is highly recommended before using real money.  It's easy to do this using websites such as Yahoo or Google finance.  Click here to search for others: https://www.google.com/search?q=trade+stocks+with+play+money

 

Are dividends calculated into Way Undervalued stocks? 

No, dividends are not included in the valuation calculation.