by: VectorVest Inc.
There’s no shortage of opinions on Facebook, but what happens when you strip away the predictions and let the numbers do the talking?
You get the truth. And the truth can lead to big profits (or protect your capital so you can live to trade another day).
We’ve used VectorVest’s Stock Analyzer tool to remove the emotion by letting the computerized indicators take over the tedious task of interpreting what the numbers have to say.
So, let’s take a look at what’s really going on with FB, starting with VALUE.
While FB has traded as high as $131.98 (Split-adjusted, September 7, 2016), its current Value, based on a combination of interest, inflation and earnings factors is quite close to that high at $139.32.
Compared to the September 19, 2016 close of $128.65, this means that FB’s stock is fairly valued.
Does that mean it’s a good buy for the future… or that it’s gone as far as it can go?
Take a look at Revelation 2 for the answer.
Remember, $139.32 is what FB is worth at this moment. However, the market places its own value on what they are willing to pay. Any number of factors can hold stock’s back from reaching their true value, but the most important is how well (or poor) the company is expected to do in the future.
So, what’s needed next is an analysis of Facebook’s long-term outlook. VectorVest’s RELATIVE VALUE (RV) indicator takes care of that by measuring the price appreciation potential over the next 1-3 years.
(Careful not to dismiss this indicator if you are a short-term trader – high RV stocks make excellent short-term trades too!)
Relative Value for Facebook is 1.54 on the VectorVest indicator scale of 0.00 – 2.00 (anything above 1.00 is favorable), that means the prospects for FB trading higher over the next 1-3 years are Excellent. It also means that FB’s numbers point to a 54% better potential ROI than you could expect from investing the same amount in a AAA corporate bond.
Good news! But don’t log in to trade just yet…
You also need to know if the potential return is high enough to warrant the risk.
That’s the job of Relative Safety (RS). The RS indicator is like a financial report card for a company. FB has an RS rating of 1.21. (Remember, above 1.00 is favorable on the VectorVest scale!)
Safety is Good for FB.
The fundamentals confirm that FB is a solid company, but there’s still more that the VectorVest analysis has in store for you.
The ultimate trump card in our analysis is TIMING.
If you’ve ever bought a GREAT stock at the WRONG time, you’ve felt the pain it can cause first hand. In contrast, even the lousiest stock (umm… Enron, anyone?) can make an investor rich if they know when the time is right to buy and sell.
VectorVest believes that the time to buy a stock is when it’s already doing what you want it to do – that means rising in price -preferably in a rising industry and a rising market!
Talk about stacking the odds in your favor!
VectorVest’s Relative Timing indicator analyzes the price trend AND momentum for you. It analyzes all the dynamics of price, not just over 1-time frame, but four to let you know whether the stock is in an uptrend or downtrend and how fast it’s moving.
FB has an RT of 1.32 – Price is in an uptrend for the short-term and momentum is Very Good.
VectorVest sums up both the fundamental (value and safety) and technical (price trend) indicators on Facebook using a single indicator – VST (that stands for Value, Safety & Timing). Facebook’s VST is 1.35, which is considered Very Good on the VectorVest Scale.
(Pssst….This master indicator is genius when it comes to ranking dozens, or even thousands, of stocks from best to worst. For example, VectorVest’s top ranked stock in the Internet/E-Commerce Industry Baozun Inc., BZUN with a Relative Value of 1.72, Relative Safety of 0.89, Relative Timing of 1.88 and a combined VST of 1.57, while Facebook is currently ranked 5th in this group.)
At the end of the day though, you really just want to know whether to buy, sell or hold, right?
Well, according to VectorVest’s rule-driven rating system, Facebook is currently a Buy due to its steady short-term price trend and favorable fundamental strength.
In closing, you should never buy a stock without a knowing when to sell. VectorVest calculates a stop-loss price for every stock, every day, and the stop for FB is currently set at $118.90.
VectorVest’s Stop-Price allows gives winning stocks room to run, while still protecting your investment. If the price of Facebook closes below the Stop-Price, FB will receive a ‘Sell’ Recommendation. The history of a stock’s recommendations is conveniently displayed at the top of VectorVest graphs.
Is FB right for your portfolio? Only you can make that call, but now you have the un-biased information to help you make the most profitable decision.
Get all this information and more in VectorVest’s Instant Stock Analysis Reports – Visit www.vectorvest.be/analyze to analyze ANY stock FREE.
VectorVest has been providing the highest quality investment research to investors for 28 years. The company’s comprehensive approach to investing combines the insight of fundamental valuation with the power of technical analysis in an easy-to-use stock analysis software package designed for all types of investors. VectorVest provides a Buy, Sell or Hold rating for over 23,000 stocks each day based on its proprietary Value, Safety and Timing system. The demand for its indicators and market timing information has prompted worldwide expansion. Today VectorVest analyzes markets in the U.S., Canada, Europe, U.K., Singapore, Australia, Hong Kong and South Africa.