Tuesday, May 4, 2010

Is it RM 0.50 is cheaper than RM 1.00??

Today let us talk some about a fundamental of a share.

Someone was asking me today, this xxx share now trading at RM 0.50, and he thinks it is very cheap then he asked me whether can buy it or not?

A company trades at RM 0.50, it is mean that it is really cheaper than a company trades at RM 1.00??
Please hold a second before you make into a conclusion!

Do you ever think about number of outstanding share of the both companies first?

If i tell you "A" company has 100 million outstanding shares, which "B" has 20 million outstanding shares. So company "A" actually is worth RM 50 million, while company "B" is worth RM 20 million.
Yes! company "A" is more expensive than the company "B"

So, when we every time look at the share price, do not simply just look at its price and think that RM 0.50 is cheaper then RM 1.00. You have to look on the total outstanding shares behind that company!

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Please note that all data given are merely blogger's opinion. It is strongly recommended that you do your own analysis and research before investing.