In my stock analysis process, I attempt to estimate the fair value of a given stock. I estimate the fair value range (instead of a one fair value). This estimation should be interpreted as the price I am willing to pay based on my risk profile and my investing objective. My fair value estimation does not necessarily attempt to determine the fair value based on value investing principles.

My process of determining the fair value captures the essence of “what is being priced by the market” and “historically what has been priced by the market”.

(I) NPV price based on 15 year DCF: I have discussed DCF based net present value pricing.

(II)  Average high yield price calculated based on past 10 years

I am attempting to estimate what would be current stock’s price based on its historical dividend payment standards. I measure this using yield. It is calculated as follows. Continue reading rest of this article…