2min chapter

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IFB246: How to Use Relative Valuation + Investing in New Companies or Current Portfolio

The Investing for Beginners Podcast - Your Path to Financial Freedom

CHAPTER

Using a Relative Valuation to Compare a Stock to Another

relative valuations are simple heuristics for comparing one company to another. If a stock has a price to free cash flow of 50 or a PE of 50, I don't care how I adjust the numbers, it's not going to be close to its intrinsic value. And so that's where the relative valuation comes in handy because you can take a very numerical approach and exclude a lot of companies from your research.

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