Some UAE stocks outperform global indices – and need to make that heard loudly

Some UAE stocks outperform global indices – and need to make that heard loudly

What is the best way to think about a company presenting its business plan about its ideas about the future? At its simplest level, one could adopt the ‘what you see is what it’s worth’ approach. Then the calculation is simple: add up the assets, subtract the liabilities, divide it by its shares and there you have the price. Another approach would be that the share price is worth whatever the people are willing to pay for it - the Humpty Dumpty method of picking a stock. We know, however, that there is more to a business than what it owns and therein comes the problems of valuation. The standard approach to evaluating price is the ‘number, weight and measure’ methodology, which is another way of saying that the most important variables are the change over time and the probabilities of the potential outcomes that could occur as part of arriving at the right value of the share price. By this metric, investors would have to evaluate how much money any investment choice would deliver to its owners. Wrapped in this decision making is the amount of dividends/buybacks that would accrue to shareholders. It is no surprise that much of