Photo by Roberto Contreras on Unsplash So we did a lot of math last time to determine the Tangible Book Value of a stock, determining if it was worth the purchase from a tangible asset perspective. For our example company, Nestlé, this purchase was not a great buy from the TBV perspective. As I said though, this doesn't necessarily mean it isn't a buy. After all, we did note in the supermarket a very large stock of their Lean Cuisine frozen meal line. Today, we calculate the fair market value, or FMV, of Nestlé. What is Fair Market Value (FMV)? Clinically, we could look at Investopedia and see that Fair Market Value is defined as, "the price that an asset would sell for on the open market," however, I think that is too cut and dry. We need to better understand what that means. This means, if the profits to earnings remain
Photo by Firmbee.com on Unsplash Finding Your Investment Opportunity Before we can analyze a stock, you have to find out what you want to invest in. You can start this process any number of ways: If you go to the supermarket and notice that the frozen meal aisle is becoming more and more like the Lean Cuisine aisle, taking up a greater part of the market. Acting upon this, you go home and find out Lean Cuisine is owned by Nestlé so you want to buy some Nestlé stock. Hold up, champ! Let's do some research first! Associated Fees You should have some tools in your tool belt (some provided to you on my Tools for Investing page). As we look up Nestlé, we will quickly find that it is a foreign stock, based in Switzerland, so you will immediately find American Depository Receipt, or ADR, fees are applicable on all trades with this company. This means you will need to account fo