A stock's intrinsic value is the real worth of a company's shares based on its financial fundamentals, such as cash flow, assets, and earnings. Comparing a stock's intrinsic value to its market price can help investors identify if a stock is overvalued or undervalued, increasing the chances of buying a stock low and selling it high in the future.
Many factors can affect stock prices, including supply and demand, company performance, and investor sentiment. By taking the time to study, evaluate, and identify undervalued stocks underpinned by promising, profitable businesses, you can thoughtfully and gradually build your portfolio around companies that align with your long-term investment objectives.