Fair Value (Episode 2) of ABC, ABMD, ABT, ACN and ADBE

In this blog, which will be the second blog in this series, I am going to calculate the fair value of the following companies:

  • AmerisourceBergen Corporation Known as ABC Symbol.
  • ABIOMED, Inc, Known as ABMD Symbol.
  • Abbott Laboratories, Known as ABT Symbol.
  • Accenture plc, Known as ACN Symbol.
  • Adobe Inc, Known as ADBE Symbol.

The fair value of the above companies will be calculated based on their market capitalization, total debt, and the cash the company has in hand, based on the financial statements released by the company in the last quarter.

Company Name (Symbol)Stock Price as Of June 15, 2022Fair Value of Stock
AmerisourceBergen Corporation, ABC142.31 $158.27 $
ABIOMED, Inc, ABMD232.35 $334.02 $
Abbott Laboratories, ABT104.80 $120.08 $
Accenture plc, ACN281.19 $322.31 $
Adobe Inc, ADBE376.92 $454.52 $
Companies’ stock prices and fair value


The fair value of stocks can be used as an indicator to show if the stock is overvalued or undervalued or traded at its fair value.

Fair Value (Episode 1) of A, AAL, AAP, APPL and ABBV

In this blog, which will be the first blog in this series, I am going to calculate the fair value of the following companies:

  • AGILENT TECHNOLOGIES, INC, Known as A Symbole.
  • ADVANCE AUTO PARTS INC, Known as AAP Symbole.
  • APPLE INC, Known as APPL Symbole.
  • ABBVIE INC, Known as ABBV Symbole.

The fair value of the above companies will be calculated based on their market capitalization, total debt, and the cash the company has in hand, based on the financial statements released by the company in the last quarter.

Company Name (Symbole)Stock Price as Of June 14, 2022Fair Value of Stock
APPLE INC, APPL132.76 $177.05 $
ABBVIE INC, ABBV137.62 $163.13 $
Companiess’ stock prices and fair value


The fair value of stocks can be used as an indicator to show if the stock is overvalued or undervalued or traded at its fair value.

Best Investment choices:AbCellera

In this series I will continue discussing companies that is considered the best choice for investment during this period of time where no one knows where is the market heading next.

AbCellera is a technology company that searches, decodes, and analyzes natural immune systems to find antibodies that its partners can develop into drugs to prevent and treat disease. From July 2020 until now its share prices dropped from 58$ until it reached to 9$. When analyzing the company financial statement , it appears that the company made high Return On Invested Capital (ROIC) greater than its peers as well as the industry in general, which made it create more value for the investors based in the free cash flow it generate that is the amount of money that left after paying all expenses and left for all the lenders and equity holders as shown below:

The ABCL created only negative ROIC in 2019, but immediately after one year the company increases its ROIC from -3% to 25%. The high ROIC which ABCL made, allow it to increase its value which lead to generate high free cash flow during the 2020 and 2021 as shown below:

The company was able to increase its Free cash flow by more than 997.5% in 2020, and in 2021 the company was still able to increase its free cash flow to 80% from 2020 and 1795% from 2019.

Based on the two major criteria that investors are looking for which is Return on Invested capital and Free cash flow, I believe ABCL considered the best choice for those who want to invest in stock market for at less 3 ears.

Randomness of Financial Markets and How can be treated

There is a book called “the random walk down wall street” written by Burton Malkiel. The author tries to discuss in this book if the Stocks market is really moving randomly or there is a pattern in its movement. He explained the four phases of the market which are known as accumulation, trending up, distribution, and finally trending down as the only fact that can be predicted in the stocks market, but all other factors are random. This is in my opinion is not true and I am going to put some thoughts regarding all financial markets stocks, Forex, Futures contracts, and commodities regarding if they are really moving randomly or there is something that is under the investors or traders control can be done.

Stock Market:

The stocks market is the most known financial market that many authors wrote about and try to explain its movement and how can be approached. And it is the most simple market that works in a predictable fashion. The reason behind that is because it consists of stocks of companies which are only a reflection of the financial statements of those companies. what I meant here is that if the fair value of a stock that is generated from the financial statement of its company is high and the price of this stock in the market is low that means definitely you need to buy this stock and wait until it reached its fair value to sell it and make a profit or keep it if the last financial statement for that company released and showed that there is an increase in the fair value of that stock. The only thing that is random here is that when the stock will reach its fair value, is it in a short time period less than 3 months, or is it in a long time period after 1 or 2 or a maximum of 3 years. This is the approach used by the Oracle of Omaha, Warren Buffett, Who said that I never looked at the screen to see the prices of stocks in the market because it’s just a little fluctuation for the stock prices and at the end, the fair value will be reached. Options which are derivatives instruments generated from stocks of the company also have a fair value which can be used as a guide for those who want to trade it or invest in it. That means somehow they are not moving in a random way and can be treated as socks.

Instruments Short Term Movement 3 monthsLong Term Movement (more than 3 years)Percent of randomness
StocksRandom Movement of PricesMoving toward the Fair Value30% to 40%
OptionsRandom Movement of Prices Moving toward the fair value 30% to 40%
Stocks and options Randomness

Forex Market:

Forex market is the most traded market especially after the advanced technology that was adopted by many individuals around the globe. Unfortunately, those who traded in Forex and believe it’s the most profitable market which is right but if traders avoid using leverage or depend on it at least as little as possible. This market is the most random market of all financial markets not because the traders think it is controlled by big banks such as Citi Bank and HSBC and others. The reason is that that many companies that work in multi countries and have different nationalities hedging their profits using this market especially when the cost of their products is in one currency and their profit in another currency. This is known to many traders as institutional trades which is only one of so many ways that institutions trade this market and that is the main reason behind the randomness. Since this market is a decentralized market and since it has so many participants that affect its movement, there is no reliable edge that can be used in this market except trading this market using probabilities trading as the one that i discussed before in this blog as trading probabilities .

Instruments Short Term Movement Long Term MovementRandomness
Forex Pairs Moving in randomMoving in randomAbove 90%
Forex Market Randomness

Future Market:

Future market is also the type of market that is only affected by supply and demand theory. But there is a financial truth which is the main trend for the future market is the downtrend, because farmers who own the physical products such as rice, wheat, and other products are selling contracts in this market as hedging for their real deal on the physical market. One good strategy that can work with people who traded these markets is only to sell this market whenever they see a high in contracts prices. Technical analysis especially the price and volume are the only source of information for the traders who want to have an edge in this market.

Instruments Short term movementLong Term MovementRandomness
Future ContractsRandom movementDown Trend, Selling About 60%
Future Market Randomness

Bottom Line:

To answer the questions that if financial markets is random?, the answer is for the short term they are working in a random way, but in the long run, the only market that is not moving in random is the stocks market and those markets that rely on it, which will always appreciate the fair values of those stocks either if they are undervalued or overvalued

Dow 30 Overview As March 20,2021

In my early posts I wrote about Dow 30 industrial average index and how it seems to me as overvalued compared to fair value of those stocks that included in it. Here I will list all the stocks inside the Dow 30 index and their fair values and the prices they are trading with in market. Based on the fair values of these stocks, a conclusion about if the Dow 30 is overvalued or undervalued or stable and has fair value can be made.

Company NameTicker Price of Stock Fair value of Stock
Apple IncAAPL119.9957.54
BOEING COBA255.82-25.5
DOW INCDOW63.91114.74
3M COMPANY3M188.71255.53
MERCK & CO INCMRK77.51162.31
NIKE INCNKE137.4923.17
VISA INCV206.982.67
WALMART INCWMT131.74716.45
Stocks Prices Compared to their fair values as of March 20, 2021

The above table listed all the 30 companies that are listed in Dow 30 with their prices and their fair values. There is some notes that should be clarified to make the above table reliable.


  1. The above table is not a recommendation for any stock in any trade, if you want to buy or short any stock do your due diligence and make sure that your investing or trading systems align with the information listed above.
  2. The assumption used to estimated the fair values of all the stocks above is as if theses companies growths’ are similar to the USA GDP growth which is 2.2%.
  3. Some of the above fair values is in minus (-) which does not make sense, but it can provide a clue about how these stocks are completely overvalued.
  4. Number of overvalued companies are (14) which is have the companies in the Dow 30 index, that might be the reason why the DOW 30 still in uptrend or sideway, and traders should exercise caution if they want to short stocks in uptrend with high momentum.
  5. Traders can use their systems to look for short term deals that presented for them by market movement, investors on the other hand need to stick to stock fair value instead of its price, because even if there will be bear move the market at the end will appreciate the stock fair value and move toward it.

Stock fair value is something completely different than its price which is listed in the market that affected by the law of supply and demand. The wise investors need to distinguished between these two things and never buy stock that its price higher than its fair value and, never sell stock that its price is lower than its fair value.