Morningstar, Inc. Commentaries
Jun 13, 2014
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Morningstar’s methodology for investing in individual stocks is based on buying high-quality firms trading at a discount to intrinsic value. This is easier said than done--intrinsic value is determined by forecasting a company’s future cash flows and discounting those cash flows back to today, a task that is extremely difficult to do with much accuracy. As such, intrinsic value for a stock could be viewed as a range of values that incorporate different best- and worst-case scenarios for the company’s future prospects.