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How would you go about deciding that the stock is undervalued? What happens when many investors...

How would you go about deciding that the stock is undervalued? What happens when many investors think that the stock is undervalued?

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The fundamental valuation for a stock is carried out by cash flow analysis method by discounting the future cash flows. This value also called the Intrinsic value is compared against the present market value of the stock. If the Intrinsic value of the stock is greater than the market value, then the stock is said to be undervalued. In such cases, the investor aware of the actual underlying value will demand more of the stock as the market price has a potential to rise to its intrinsic value. This upward demand in stock would increase the prices of stock matching the supply demand fundamentals.

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