Accounts and Finance Exp 8 hours

Stock Portfolio Project

Developing and Monitoring a Stock Portfolio

  WHY ARE WE DOING THIS?

            Everything that we learn in Managerial Finance is centered on helping you make wise business decisions based on informed financial analysis. Through this assignment, you will get to see how effectively (or ineffectively) the managers of your selected firms perform the tasks we will be discussing in this class.

 

HOW DO I PICK A STOCK?

Off limits are any other companies that employ you or any member of your immediate family.

Pick a stock by searching the financial section of the newspaper (or an appropriate website such as  www.motleyfool.com ,  www.finance.yahoo.com ,  www.schwab.com , www.moneycentral.msn.com ,  www.Bloomberg.com ,  www.zacks.com , etc.) until you find a story about a company that you think you can make a profit on over the next six weeks. Do some background checking on the company. This is easy on the financial websites mentioned above. Has the company received positive press over the past year? Do favorable developments look like they will continue? Why? – these are the kind of questions you want to ask but are not the only ones to consider.

When you have answered these and other questions to your satisfaction, you are ready to find another company to invest in. You should choose a minimum of five companies to invest in with a maximum number of ten. You will need to allocate a total of $100,000 (in imaginary money, unfortunately) between these companies.

 

DIRECTIONS FOR SETTING UP YOUR PORTFOLIO

1.    You have $100,000.00 (one hundred thousand dollars) to invest in stocks.

2.    You must invest in traditional corporate stock. Derivative securities, i-shares, ETF’s, commodities, options, mutual funds, etc. are not viable choices.

3.    You must select a minimum of FIVE companies to invest in. Each company’s stock must be traded on the NYSE, NASDAQ, or AMEX exchanges. There is a maximum number of ten investments.

4.    You must perform all work in selecting your investments. You may not act on “tips” or advice from other people.

5.    Once you determine who you will invest in, you will need to know the company’s “ticker symbol.” In the future, you will look up all company information by its “ticker symbol.” It is very easy to find ticker symbols by going to Finance,Yahoo.com,Bloomberg.com, or  moneycentral.msn.com . Many financial websites feature “ticker symbol lookup” services.

6.    You need to calculate how to divide up your $100,000 between your various investments. For example, suppose stock X has a price of $1000 per share and stock Y has a price of $500 per share. You could buy 50 shares of stock X for a total of $50,000 ($1000 * 50). This leaves you with $50,000. You would then buy 100 shares of stock Y for a total of $50000 ($500 * 100). You have now invested all of your $100,000.

7.    It is unlikely that you will be able to invest exactly $100,000. Try to get as close as you can without going over $100,000. Any amount you don’t invest will be held as cash. Keep track of this “cash” amount. You will need to enter it when you track your portfolio.Once you figure out how many shares of each stock you can buy, go to a financial website of your choice like those listed in ‘How Do I Pick a Stock” and create a tracking portfolio. You will most likely need to create a user name and password. You should record these items in an easily accessible location.

8.    Once you have a user name and password enter your portfolio, you must enter (1) the ticker symbol of each stock, (2) the date you “purchased” the stock, (3) the price per share of each stock, (4) the total number of shares of each stock, and (5) any cash balance that remains from your $100,000 after you have purchased all the shares you like.

 

WHAT YOU MUST TURN IN FOR THE INITIAL ASSIGNMENT: Due Date 8/30/15

Create a report answering the following questions:

1. Design a cover page for your portfolio. Name your portfolio. Include a cover page with your name.

2. Take a screen print of your portfolio.

3. Answer the following questions in a short essay. Grammar and spelling always count. As you are now officially enrolled in a high-level business course, I expect your writing to be professional and free of mistakes.

4. THE QUESTIONS:

· Demonstrate that your calculations for investing the $100,000 are accurate.

· Describe the business of each company you have invested in.

· Describe why you chose to invest in each company.

· What are the risks each company is subject to? (For example, Gold mining stocks are risky because of potentially significant price fluctuation due to the actual commodity, and because the mines they explore may turn up ‘empty’.)

 

PERIODIC UPDATE:  Due Date 9/20/15

1.    When the course guide calls for it, you will need to turn in a written report summarizing the performance of your investments.

2.    Each update will need to contain:

a.    A printout of your portfolio page.

b.    A statement of why you believe your investment in each company appreciated or depreciated.

c.    A news story on at least two of your companies.

d.    A statement of why you think the news will make the company’s stock go up or down.

FINAL PORTFOLIO PRESENTATION ASSIGNMENT:  Due on 10/19/15

 

1.     Select two of the companies you have chosen to invest in. For each company, identify a competitor. For example, if I invest in Dell Computers, I might choose Apple Computers as the competitor.

2.    Go to a financial website of your choice like  zacks.com  or  moneycentral.msn.com to pull balance sheets and income statements for each company. When you type in the ticker for each company, you will get a detailed quote with several options that appear in black, bold text in the middle of the screen. One of those options is “Financials.” Click on this link and print the most recent balance sheet and income statement for each of your companies and their competitors.

3.    Complete the chart on the next page for each of your companies

4.    Prepare a presentation that addresses the items and questions below. You should use Microsoft PowerPoint to create visual aids for your presentation.

a.    A final printout of your portfolio page.

b.    Demonstration of how each stock performed from the time of purchase.

c.    Briefly describe each of your companies. What does the company do to make money? What are its most notable products / services?

d.    A statement of why you believe your investment in each company appreciated or depreciated.

e.    A news story on at least two of your companies. Did you find any news about either of your companies that indicates there will soon be a change with any major advantages / disadvantages? Explain.

f.     A statement of why you think the news will make the company’s stock go up or down.

g.    Briefly describe each of the competitors. How does the competitor’s business strategy differ from your company’s strategy?

h.    Examine your ratio calculations (you should complete at least 2/3 of these ratios and examine two to three for comparative purposes). Compared to their competitors, what are each company’s major advantages?

i.      Discuss the importance of these advantages. Why are the numerical advantages such a big deal?

j.      Compared to their competitors, what are each company’s major disadvantages?

k.    Discuss the importance of these disadvantages. Why are the numerical disadvantages such a big deal?

 

Name of My Company:                               Name of Competitor:

 

Ratio / how calculated	My Company’s Ratio	Competitor’s Ratio
Current Ratio (show how calculated)
Quick Ratio
Total Debt Ratio
Debt to Equity Ratio
Equity Multiplier
Times-Int.-Earned Ratio
Inventory Turnover Ratio
Days’ Sales In Inventory
Receivables Turnover Ratio
Days’ Sales in Receivables
Total Asset Turnover
Profit Margin
ROA
ROE
EPS
PE Ratio (get most recent share price)