Following the historic artificial intelligence expansion of the past few years, stock prices have reached levels that leave even seasoned analysts scratching their heads. But is a high price always a bad sign? Not necessarily.
Determining if a stock is overvalued is not just about the number on the ticker; it is about the relationship between that price and the underlying business reality. This article will provide you with a toolkit to strip away the market noise and uncover the true worth of any investment.
The most common way to start a valuation check is with the Price to Earnings (P/E) ratio. Think of the P/E ratio as the “price tag” of a business relative to its profits.
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