I have an Excel spreadsheet, a small amount of money I can afford to lose outside my regular investment accounts, and am putting far too much effort into this than it's worth. So I will start with the disclaimer that I'm doing this with a very small proportion of my portfolio and I'll probably lose it all eventually. I think indexing is most important, and I would advise anyone considering this to use a small percentage of their portfolio like I am, but I'm also a believer in that you have to have a little fun with it.
That being said I've been fine tuning the valuation metrics I use when deciding on stocks to buy. Learning a bit more every day. The one thing I'm starting to struggle with is weighing them when it comes to decision-making. So I'll start with the metrics I'm using:
Debt to Equity (Generally 2 or less)
Price to book (1.5 or less)
Price to Earnings (15 or less) (or better: Earnings Yield – 1/15 = 6.67 or greater)
Dividend Yield (3% ot greater)
Dividend Yield/Earnings Yield (to make sure they're not spending too much on dividends) – less than 45%
Price to Sales – less than 1
Metrics relative to the industry in terms of percentile the company is in for said metric (P/B, P/E, P/S, EV, FCF, profit margin, and ROI)
Putting these together I feel like I should get a pretty good idea of where the stock is at in relation to it's fair value, but does anybody else who plays around like this have a way of putting it all together where each parameter is weighted and helps to formulate a decision? Better yet determine a target price?
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