This research project will require you to identify and thoroughly research a healthcare technology company for potential investment.
The most important step in investigating and researching a company for an investment opportunity (or any other research assignment) is to conduct a thorough investigation before conducting the analysis. Collecting all the relevant information prior to completing the analysis ensures accurate and valid findings. The process we detail below will help you explore companies for potential investment, research projects, and throughout your career when considering employment possibilities.
After all the individuals in class have presented their individual projects, the class will review the individual proposals in an attempt to identify a portfolio of potential investments.
What is Your Goal?
You should begin any company or industry research project by clearly articulating your research goal. What is it that you are hoping to find—are you looking for a company with explosive potential? A company that is a steady performer with low risk and some catalyst for significant future growth? Always begin the research process with a clear objective.
Choose an Industry and Company:
To start your investigation think about industry’s you believe will perform well (pharmaceutical, insurance, food services, etc), then begin investigating companies within that industry. For this project you will choose a healthcare technology company.
Select a Company:
Find out more about the company of interest by searching the company’s name on the web. You can use the FSU electronic resources like Hoover’s Company Profiles as a starting point. What do they do? How big are they? Is the company privately held or is it publicly owned and traded on the market? It is generally easier to find more information out about publicly traded companies, as they are more likely to be covered in the media and they are required to file with the SEC. The purpose of this assignment is to identify opportunities for investment; therefore the focus should be on public firms.
Overview the Company:
You need to be able to summarize the company in terms of their history, strategy, sales, products and services, brands, competition, financial performance, size and locations, etc. The information in the FSU library includes detailed company overviews, histories, and reports for public and numerous private companies.
Monitor News About the Company and Industry:
What is the latest news on your company? You need to constantly monitor the news to keep track of the company’s actions, industry trends, legal issues, and opportunities. You can use various sources on the web for this.
Study Company Performance & Financial Information:
If you have selected a public company you should be able to locate their quarterly and/or annual earnings reports at www.sec.gov. Additionally, publically traded companies have “Investor Relations” information on their websites. The most important statements to look for are the income statement, balance sheet, and the cash flow statement as they are the source for much of the information you will use to calculate several important ratios. In addition you should keep an eye on their daily stock closing prices to gain insight as to how the market views their performance and environmental conditions.
Study Business Analyst Reports:
Business analysts from investment firms constantly release research reports for investors on publicly traded U.S and global firms. These reports take into consideration current company performance, market pressures and opportunities, company research and development, political and legal implications, product launches, and more.
Examine the Competition and Industry Analysis:
Every analysis needs to include a look at the company’s external environment, namely the industry and the competition. Competitive action (new product launches, pricing strategies, partnerships etc) and industry pressures (new regulations, consumer trends, etc) all have an impact on the company’s performance and opportunities.
Questions to Consider in Analyzing a Company:
After gathering and researching your company and industry, answer the following questions in evaluating whether or not this company is a solid investment choice. We will be discussing the advantages and disadvantages in class—be prepared to participate and share your findings on your company.
1) Is this a public or private company? Where is it headquartered?
2) What are the company's primary business, products, and services?
3) Summarize the current and critical news: product launches, industry trends, strategic partnerships, dividend announcements, etc.
4) What is the company’s current situation—drawing from the company history, investor reports, company overview, financial performance, etc identify their major strengths, weaknesses, opportunities and threats (SWOT analysis) of this company.
5) What are the company’s future forecasts? What does company leadership say about future? (conference call transcripts) What are analysts saying?
6) Ticker symbol
7) Calculate the:
o Current ratio
o Profit margin
o EBITDA
o Total asset turnover
o Return on equity
o Price earning ratio
o Dividend yield
o Revenue growth rate
o Stock price-to-tangible book value
o Price-to-future cash flows
8) Compare to industry information. Use the information gathered for the company analysis to compare the company to the appropriate industry norms and averages.
9) Evaluate as an investment candidate.
o Low Price-to-Tangible Book Value?
o Low Price-to-Future Cash Flows?
o Catalyst?
Group Vetting of Candidates:
After individual presentations, the class will vet the individual ideas to determine investment potential and make recommendations for a portfolio.