When is the ideal time to buy a stock?

After identifying the best companies, the next step is to decide what would be a reasonable entry price to start buying. Here are two factors Whale considers before start buying in; 

• Is the stock price at a discount?

To have a reasonable margin of safety, Whale only prefers to invest in outlier businesses that are undervalued. This means the price is below the fair value. There are multiple ways to value a company; some commonly used ones are; Discounted cash flow from operations, PEG Ratio, Discounted Net Income, and Price-to-book ratio. 

• Is the overall trend in your favor?

A good entry time is when the trend is in our favor. Always ensure that the price is either on an uptrend or consolidation. Never buy on a downtrend because, you can buy cheap, but cheap could get cheaper even if temporarily. Also, never buy the high of the uptrend. Always buy during a temporary retracement or dip of the uptrend.

By using Whale, you can get alerts on the best companies at best prices!