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I have developed a stock trading strategy combining value, growth and momentum. I invest primarily in US, UK, Indian and Hong Kong stock markets. Trader for several years, also a CFA charterholder.
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  • DCF Valuation For More Than 3000 Stocks 0 comments
    Jul 23, 2014 8:46 AM | about stocks: AAPL, FB, C, JNJ, DIS, CHL, COP, GOOGL, BIDU, IBM, XOM, WFC

    I have created a three-stage DCF model to value more than 3000 stocks. The valuation was done with the following assumptions:

    - Growth for the first 5 years - The lower of estimated 5-year growth rate or past 5-year sales growth rate
    - Growth for the next 5 years - Half of the above mentioned rate
    - Terminal growth rate of 2%
    - Discount rates of 8%, 10%, 12%, 14%

    The DCF valuation model is only feasible for companies with at least slightly predictable cash flow, it doesn't work well in cyclical or biotechnology sectors, or for companies undergoing rapid change. As estimating a discount rate for each company is more art than science, I have used several discount rates to show potential undervaluation/overvaluation. Only companies with a profit this year, or estimated profit next year were valued. As I used a general formula for all stocks, there might be some extremes due to their growth rates/estimated profits.

    DOWNLOAD THE VALUATION OF MORE THAN 3000 STOCKS

    Below are some notable examples with upside/downside based on various discount rates (8,10,12,14):

    Ticker Name 8% 10% 12% 14%

    AAPL
    AMZN
    BAC
    BBL
    BHP
    BP
    BRK-A
    BTI
    BUD
    C
    CHL
    CMCSA
    COP
    CSCO
    CVX
    DIS
    FB
    GE
    GILD
    GOOGL
    GSK
    HD
    HSBC
    IBM
    INTC
    JNJ
    JPM
    KO
    MRK
    MSFT
    NVS
    ORCL
    PBR
    PEP
    PFE
    PG
    PM
    PTR
    QCOM
    RIO
    RY
    SAN
    SAP
    SLB
    SNY
    T
    TM
    TOT
    TSM
    UL
    UN
    UTX
    V
    VZ
    WFC
    WMT
    XOM
    Apple Inc.
    Amazon.com Inc.
    Bank of America Corporation
    BHP Billiton plc
    BHP Billiton Limited
    BP plc
    Berkshire Hathaway Inc.
    British American Tobacco plc
    Anheuser-Busch InBev SA/NV
    Citigroup Inc.
    China Mobile Limited
    Comcast Corporation
    ConocoPhillips
    Cisco Systems, Inc.
    Chevron Corporation
    The Walt Disney Company
    Facebook, Inc.
    General Electric Company
    Gilead Sciences Inc.
    Google Inc.
    GlaxoSmithKline plc
    The Home Depot, Inc.
    HSBC Holdings plc
    IBM
    Intel Corporation
    Johnson & Johnson
    JPMorgan Chase & Co.
    The Coca-Cola Company
    Merck & Co. Inc.
    Microsoft Corporation
    Novartis AG
    Oracle Corporation
    Petroleo Brasileiro
    Pepsico, Inc.
    Pfizer Inc.
    The Procter & Gamble Company
    Philip Morris International, Inc.
    PetroChina Co. Ltd.
    QUALCOMM Incorporated
    Rio Tinto plc
    Royal Bank of Canada
    Banco Santander, S.A.
    SAP SE
    Schlumberger Limited
    Sanofi
    AT&T, Inc.
    Toyota Motor Corporation
    Total SA
    Taiwan Semiconductor
    Unilever plc
    Unilever NV
    United Technologies Corp.
    Visa Inc.
    Verizon Communications Inc.
    Wells Fargo & Company
    Wal-Mart Stores Inc.
    Exxon Mobil Corporation
    94%
    -34%
    35%
    9%
    24%
    44%
    20%
    14%
    21%
    53%
    -6%
    75%
    9%
    45%
    22%
    -7%
    147%
    -3%
    213%
    75%
    15%
    2%
    -26%
    44%
    37%
    -2%
    42%
    5%
    7%
    18%
    28%
    99%
    123%
    11%
    9%
    -16%
    12%
    34%
    127%
    48%
    16%
    14%
    35%
    56%
    27%
    10%
    103%
    107%
    117%
    -6%
    0%
    1%
    38%
    33%
    62%
    22%
    6%
    63%
    -46%
    16%
    -7%
    6%
    23%
    1%
    -3%
    2%
    31%
    -19%
    47%
    -7%
    24%
    4%
    -21%
    103%
    -17%
    162%
    46%
    -2%
    -13%
    -36%
    24%
    16%
    -16%
    22%
    -11%
    -9%
    0%
    9%
    68%
    90%
    -6%
    -7%
    -28%
    -4%
    15%
    91%
    27%
    -1%
    -2%
    14%
    31%
    9%
    -5%
    72%
    75%
    83%
    -20%
    -15%
    -14%
    16%
    13%
    38%
    4%
    -9%
    39%
    -55%
    0%
    -20%
    -9%
    6%
    -14%
    -17%
    -13%
    13%
    -30%
    24%
    -20%
    6%
    -10%
    -32%
    69%
    -28%
    120%
    23%
    -15%
    -25%
    -45%
    7%
    -1%
    -28%
    5%
    -24%
    -22%
    -14%
    -7%
    43%
    63%
    -20%
    -20%
    -38%
    -18%
    -1%
    61%
    10%
    -14%
    -15%
    -3%
    11%
    -7%
    -18%
    47%
    49%
    55%
    -31%
    -27%
    -25%
    -2%
    -3%
    18%
    -11%
    -21%
    18%
    -62%
    -13%
    -31%
    -21%
    -8%
    -26%
    -28%
    -25%
    -1%
    -39%
    6%
    -30%
    -8%
    -21%
    -41%
    40%
    -37%
    87%
    5%
    -26%
    -35%
    -52%
    -7%
    -15%
    -37%
    -8%
    -35%
    -33%
    -26%
    -20%
    22%
    41%
    -31%
    -30%
    -46%
    -29%
    -14%
    37%
    -5%
    -25%
    -26%
    -16%
    -5%
    -19%
    -29%
    26%
    29%
    32%
    -41%
    -37%
    -35%
    -16%
    -16%
    2%
    -23%
    -31%

    Disclosure: The author is long BIDU, PANW, KORS.

    Themes: Valuation, DCF, Market Stocks: AAPL, FB, C, JNJ, DIS, CHL, COP, GOOGL, BIDU, IBM, XOM, WFC
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