Finance homework week6 help
mtatcelo5
currenteconomictrends.docx
Running head: CURRENT ECONOMIC TRENDS 1
CURRENT ECONOMIC TRENDS 9
Abstract
In this paper we will discuss two (2) industries and three (3) stocks associated with each of those industries. The chosen industries are automobile and pharmaceutical, which are the most talked about in my opinion. The differences between the two industries is what this paper will be looking at and the portfolio created will hopefully reflect enough information to answer any questions that may arise. The information will be pulled from such sites as WSJ Wall Street Journal, Yahoo Finance, and Bloomberg. Let’s take a look at some of the definitions of words that will be seen throughout this paper. Automobile Industry is the wide variety of organizations that manufacture, design, and sell vehicles. Pharmaceutical Industry are companies that develop the drugs that people use. Industry is the process of raw goods or materials, or products created with the use of machines. Stocks is simply a type of security. Portfolio would be the variety of investments. Cyclical means that it occurs in a cycle. Non-Cyclical is where things stay constant, doesn’t follow a business cycle.
Keywords: Pharmaceutical, Automobile, Industry, Stocks, Portfolio, Cyclical, and Non-Cyclical
Summary
The first industry chosen to be discussed will be the automobile industry and three (3) stocks chosen for that particular industry. Taking a moment to discuss the type of industry this is will be the first step. The automobile is a cyclical industry because it follows a seasonal or annual type cycle. (Bodie, Kane, & Marcus, 2014)Since it is sensitive to what we call a business cycle means that the revenue generated will be higher when the economy is doing well, and ultimately considerably lower when the economy isn’t doing so well. The way this type of industry deals with the not so good times is by laying employees off, and could possibly cut benefits. ("Investopedia.com," 2016)This industry does well when the economy is strong because the more money consumers have the more likely they will purchase vehicles. Comparing this to what was read in the textbook it depends on a lot of factor’s mainly supply, demand, government actions, and the health of the economy. (Bodie et al., 2014, p. p.119) The three (3) stocks that were chosen were as follows: Ford (F) Motor Co., Toyota (TM) Motor Corp., and Fiat Chrysler (FCAU).
Ford (F) Motor Co. Stock
This is stock is currently down as of July 15, 2016 is reading at -0.08(-0.59%). (http://finance.yahoo.com/quote/F) Looking at an article found through Yahoo Finance looks like Ford is slowing down a little bit in their European market. Even though it’s slowing down this company has been consistent and investors are encouraged to keep with it. The company is turning this market around and still continue do well. The political effect that will start to affect Ford in the following quarter’s to come is the decision Europe made to leave the European Union. The impact from this political decision is still unknown as to the extent and how bad it could be. However, the sales are continuing to go up but in one month this year the growth rate was lower than expected. ("A Look at Ford's European Sales Amid Industry Slowdown," ) The two (2) major things to take away from Ford’s Sales in the European market is that first it continues to grow in sales. The majority of the company’s income is generated in its more traditional or also known as Euro 20 and that in this the sales however slow are continuing to grow. The second thing to take away from this is that investors have to understand that the models are critical more so than they are in the U.S market as Ford continues to compete with other European manufacturer’s. The strategy that Ford is implementing here will ultimately help in mitigating the negative impact from being unable to sell its luxury model brand in the region. (Miller(TMFTwoCoins), June 17, 2016 at 1:55PM)
As far as it goes for Ford in the United States (U.S.) it is still number one in sales. The biggest news here is that even though this company offers a 0% APR for a period of 60 months and is not as aggressive as other loans; this is however aggressive for this company as its sales were extremely high in the first half of the current year for the truck model F-150. This could lead us to think why Ford is implementing something like this. Is there an overabundance of the particular model, is feeling some competition from some of its competitors, and are consumers going to be able to pay their debt? The new promotion has many questioning why, and what is going on as the promotion also offers deep discounts as well for many other models. (McIntyre, July 17, 2016 10:00am EDT)
Toyota (TM) Motor Corp.
This stock is currently do well and is up 0.84 (0.78%) as of July 15, 2016. Toyota is experiencing some issues with some of its vehicles that is manufacturing. The Tesla had its first fatal crash in a motor vehicle that was using what is called a model’s autopilot. ("Why Tesla Crash Won't Slow The Self-Driving Car Race," July 15, 2016) The one thing that we can see from the articles on Yahoo Finance site is that even though Toyota is maintaining there are definitely some questions that should be asked about the safety of the technology that is being created. It seems as if they aren’t concerned about the safety of the self-driving car. Technology must go on, but at what cost. Currently Toyota has an excellent rating in its overseas market assessed and given by Moody, but it is still unknown as to how the political shift will affect automotive manufacture’s.
Fiat Chrysler (FCAU)
This car manufacture isn’t doing so well either as it is down and all current ratings suggest buy to holding status at 2.9 and is currently -0.01(0.15%). (http://finance.yahoo.com/quote/FCAU) One article is suggesting that given the tough run Chrysler has had and in particular the Fiat side of its business, it should drop Fiat. Fiat sales are down severely and it is not looking that good that sales will or would go up at all in the next quarter. (McIntyre, July 17, 2016)Even with new plans to implement strategies that will support growth for the company. It is still not known whether the Fiat side will be able to meet what investor’s expect of them. This company has a ton of work ahead of them in order to maintain the Fiat side. The one concern is the recent political happening where Europe has voted to not stay in the European Union. With all the articles on Yahoo Finance this company is having definite issues and those issues need to be addressed promptly if this company is to survive in the U. S. or even overseas.
Non-Cyclical Industry
Pharmaceutical companies fall into this category, because everyone that takes medication will continue to purchase it whether the economy is good or not. Even when jobs are lost and unemployment is on the rise consumers will continue to use utilities, cosmetics, groceries, and pharmaceutical’s. These items consumers have to have regardless of the economy at the time. (Tarver, May 5, 2015 - 1:11 PM EDT)
Valeant Pharmaceutical International, INC
Currently the stocks are down and the suggested rating is at 3 which means hold status. The shareholders are selling of their stocks and shares. Looking at the different articles on Yahoo Finance this is not currently a company you want to buy into at this time.
Pfizer, INC (PFE)
Even though it is currently down, its status is 2.2 (buy) rating is a go for this stock. Sifting through articles for this particular company it seems to be doing well. The new vaccination that it has recently come up with for pneumonia has little to none in side effects and is receiving the approval button from the FDA Food and Drug Administration. Pfizer is also acquiring another company and that is a good sign of growth.
Eli Lilly and Company (LLY)
Looking at this stock for this company, even though its stocks are down the recommendation status is a 2 which means buy. They seem to be doing well with getting sponsor’s and the testing of their new drugs that they are currently trying to get on the market. They also seem to have a good rating and recommendations from the FDA and don’t seem to be struggling as much as other drug companies are currently.
Conclusion
The trends and changes that I see within the companies I have written about in this paper is the advancement of technology and innovation that is being created. There does need to be some concern and implementation to secure the safety of the consumers with technology such as autopilot in vehicles, and the side effects that some of these new drugs that are being put out there. Some of the articles that I glanced at would impact my financial expectations as they are not doing as well as they should be, which would cause me not to invest in them as they are just too risky.
References
A Look at Ford's European Sales Amid Industry Slowdown. (). Retrieved July 17, 2016, from http://www.fool.com/investing/2016/07/17/a-look-at-fords-european-sales-amid-industry-slowd.aspx?source=yahoo-2&utm_campaign=article&utm_medium=feed&utm_source=yahoo-2&yptr=yahoo
Bodie, Z., Kane, A., & Marcus, A. J. (2014). Investments (10th ed.). NY, New York: McGraw-Hill Education.
Cyclical Industry Definition|Investopedia. (2016). Retrieved July 17, 2016, from http://www.investopedia.com/terms/c/cyclical_industry.asp
McIntyre, D. A. (July 17, 2016 10:00am EDT). Ford F-150 Gets 0% For 60 Months Financing . Retrieved July 17, 2016, from http://finance.yahoo.com/m/b04e2a7c-5746-360e-892b-c5c1fc997b58/ss_ford-f-150-gets-0%25-for-60.html
McIntyre, D. A. (July 17, 2016). Chrysler Should Dump Fiat in U.S. . Retrieved July 17, 2016 , from http://finance.yahoo.com/m/d0f2ea48-7040-39af-a67c-fb92bb539491/ss_chrysler-should-dump-fiat-in.html
Miller(TMFTwoCoins), D. (June 17, 2016 at 1:55PM). 2 Key Takeaways From Ford's Sales in Europe. Retrieved July 17, 2016, from http://www.fool.com/investing/2016/06/17/2-key-takeaways-from-fords-sales-in-europe.aspx
Tarver, E. (May 5, 2015 - 1:11 PM EDT). What is the difference between cyclical and non-cyclical stocks? . Retrieved July 17, 2016 , from http://www.investopedia.com/ask/answers/050515/what-difference-between-cyclical-and-noncyclical-stocks.asp
Why Tesla Crash Won't Slow The Self-Driving Car Race . (July 15, 2016). Retrieved July 17, 2016, from http://finance.yahoo.com/m/7295a20e-4cc9-3461-8a5e-40b0d437c3da/ss_why-tesla-crash-won%26%2339%3Bt.html
