Assignment
Option 1: Stock Analysis and Recommendation Project
In this Portfolio Project, you will be analyzing a firm and submitting its name in Module 2 (see the Module 2 folder to read about this Portfolio Milestone. There are restrictions concerning the company may choose, so be sure to read the Milestone). You will write a paper that leads you to a supported investment decision.
The paper must contain three parts, as outlined below. Your presentation should not simply repeat quantitative work already performed, but instead discuss and justify with supportive evidence from scholarly sources what your work means to the investment decision.
Part 1: Top-down analysis
When performing top-down analysis, one considers the current state of the economy, an industry outlook, and the potential success of an investment in a specific firm. This section of your paper should include the following:
1. A brief review of current economic trends in your company's industry. Consider how this industry is expected to perform in the coming two to three years given current macroeconomic trends. Be sure to discuss the overall economic outlook in the context of your firm's industry.
2. A brief review of your chosen company's outlook. What are analysts saying about the future of this firm? What do you think about the company's outlook? Report the company's beta as well as the 12-month high and low price of your firm's stock in this section of your paper.
3. A discussion of the results found from performing DuPont Analysis on your firm for the past three years as well as the most recent year of your firm's closest competitor. You should create a table that organizes your data and include it as an appendix to the paper.
You must use at least five sources of information to complete this section of your paper; be sure to cite all sources used. This section of your paper will be 3-4 pages in length.
Part 2: Stock Valuation
This is a discussion of the intrinsic value of your firm's common stock. You may also want to include a brief discussion of analysts' opinions concerning your firm's stock value at this time. To complete this section of the paper, you will:
1. Calculate intrinsic value using at least two methods. You have learned three methods of calculating an intrinsic value, including the Dividend Valuation Model, Dividends-and-Earnings method, and the P/E approach. You may have to make some reasonable assumptions to form values.
2. Compare and discuss your intrinsic values to the current price of the company stock.
3. Include your quantitative work in an appendix to your paper, of whatever length is adequate to express your calculations.
Be sure to cite at least two sources for data used in this part of your analysis. This section of your paper will be 1-2 pages in length.
Part 3: Investment Recommendation
You have been given a portfolio of securities to which your firm's stock may or may not be added. Given the analysis that you have completed in Parts 1 and 2, you will now make an investment decision. Does it make sense to add the stock to this portfolio? You must make a decision and support your decision with at least three supporting facts that you learned in your analysis. You must also have at least one cited source, so be sure to cite the source(s). You should also comment on any reason(s) that you hesitate with that decision.
This section will be 2-3 pages in length.
Your entire paper must comprise the following:
• Title page.
• An executive summary of your analysis (no more than one page).
• Part 1: Top-down analysis.
• Part 2: Stock Valuation discussion.
• Part 3: Recommendation with conclusion.
• At least eight credible sources (a minimum of five for Part 1; two for Part 2; and one for Part 3), all cited in the Reference page.
• Appendix 1: DuPont Analysis calculations.
• Appendix 2: Quantitative Analysis calculations using at least two methods of estimation.
Format your assignment according to the following formatting requirements:
1. The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also include a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
3. Also Include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.