ANALYSIS OF PERFORMANCE
Choose THREE companies to form a portfolio of The companies can be diversified across different industries or from a single industry. Before making any selection, based from the fundamental information that you gathered from the search (for example the companies’ earnings, stock price historical performance, dividends, earnings per share (EPS), beta etc) you may also want to examine which sector and industry you think will grow more rapidly, hence, will give you more earnings than other sectors. Your selection can be based on the risk characteristics and your preference. Remember one of the finance rules “do not put all eggs in one basket” when selecting companies to include in your portfolio of investment.
Write a brief description of each of the companies in your portfolio (including its sector and major competitors).
Briefly explain the reasons for choosing the companies as your portfolio of investment:
Economic (macroeconomic) analysis (describes the macroeconomic situation in the particular country and its potential influence on the profitability of stocks).
Industry analysis (evaluates the situation in the particular industry/ economic sector and its potential influence on the profitability of stocks).
Based on your risk attitude (risk averse or risk taker) briefly explain your selection of companies.
Record fundamental information about the companies – Company analysis: (create a table for the companies’ financial data):
company’s earnings (5-year earnings)
stock price historical performance (5-year performance in a chart)
dividends (5-year dividend history)
earnings per share (latest date)
beta (latest date)
market capitalization (latest date)
total assets (5-year period)
capital structure (total liabilities and total equity – 5-year period)
5.Assess major systematic and unsystematic risks of the companies. Read the Business section Form 10-K reports for US companies (http://www.sec.gov) – To find information about RISKS.
Based on the five-year stock price performance of the companies in the portfolio, as well as other factors like macroeconomic, industry and company analysis, analyze possible reasons for the stock price changes as observed.
