Alibaba kaufen, WalMart verkaufen

Not only does it allow you to identify the substance of a company’s balance sheet, what it owns (similar to what you have in your own savings account less all debt), but it also encourages a focus on the future free cash flow stream of the entity (much like your salary after expenses, for example). Intrinsic value estimation provides the backbone behind the conviction that an investor gains in either sticking with an idea or throwing in the cards. You can perform discounted cash flow analysis, too.  
Let’s walk through a few examples to help explain this concept.
In mid-September, shares of Alibaba (BABA) had been in a tailspin, with investors growing concerned about the health of the Chinese economy and the impact on consumer spending. Relatively cautious comments by management also served to punish the Chinese e-commerce giant’s shares, all the way down to the high-$50s per share. It wasn’t looking good for shareholders.
But while others were calling for the company to fall another 50% from depressed levels, those that applied sound fundamental analysis backed by a discounted cash flow process were able to shrug such concerns off. In mid-September, Valuentum addressed “The Puzzling Attack on Alibaba,” walking through five distinct reasons why Alibaba shares would be resilient:
        1.§Alibaba is significantly free cash flow positive.
        2.§Alibaba’s valuation is not stretched.
        3.§Why no long-term focus?
        4.§Why is precision important?
        5.§Businesses are their future free cash flow streams.