STOCK SELECTION PAPER COMMENT: your topic overview for your stock selection paper is due Monday, Nov. 3. Please write a paragraph about the industry you have chosen or, preferably, the stock in that industry you think is undervalued and therefore you would like to invest in. Once the paragraph is written please post it to this post by clicking on comment, writing the comment, and then publishing it. Make sure you are in your google account before you attempt to do any of this or you will lose your comment. Also, please just use your first name or initials plus your class period to protect your privacy.
WEEK'S SCHEDULE(22), FEB. 25, 2013
EYE-OPENER OF THE WEEK: When you can recognize that someone is talking rot, you are an educated man. Lord Action KEY DATES: 1. On Monday, Feb. 25, we will debrief round 2. 2. On Thursday, Feb. 28, Glenn Weinstein will speak to us about the municipal bond market. 3. On Monday, March 4, we will have a quiz on the Wheelan chapter on special interests, Glenn Weinstein's talk and chapter 10 in Colander on The Aggregate Demand/Aggregate Supply Model. 4. On Wednesday, March 6, Steve Kaplan will talk to us about income inequality and CEO pay. The long period. The extra half hour in the long period will be devoted to group work for round 3 of the Capsim simulation. CLASS ONE: we will debrief round 2 and discuss chapter 7 in Wheelan on special interests. Period 3 will also work as groups on round 3 of the Capsim assignment. HOMEWORK: please read chapter 10 on The Aggregate Demand and Aggregate Supply Model up to The Short-Run Aggregate Supply Curve. CLASS TWO: We will discuss the first half
According to Peter Lynch, the smart investor buys stock in areas in which he is familiar. For him, this meant buying stock in L’Eggs, which he tested in comparison to No Nonsense, and Chrysler, which he knew was fixing the only issues people had with its cars. Applying this to my stock selection, I am choosing a company I know very well: Wintrust. As an intern at Hyde Park Bank, one of 124 community banks under Wintrust, I became quite familiar with the company. At its inception in 1991, Wintrust’s mission was to serve a small part of Chicago with personalized banking services. That mission to give people personalized banking with great customer service (Wintrust’s “story”) has not changed to this date, nor does the company show any sign of straying from this mission in the future. By combining the personable and customer-focused aspects of community banks and the prowess of a larger body to keep them focused, Wintrust has a winning model. Its stock price has risen steadily over the years, save for during the years of the recession; its net income and total assets have increased significantly since 2010; and, with the continued goal to provide all Chicago-area residents community banking, Wintrust will continue to add community banks to its nucleus. Wintrust has added 45 banks in the past five years, and the company’s profits have soared. It’s quite reasonable to think this trend will continue for years to come.
ReplyDeleteI am interested in choosing Abercrombie & Fitch (ANF) stock because, although their stock has been depreciating recently, I believe the company’s future plans will cause it to increase significantly. In 1988, Mike Jeffries (who is now the CEO) transformed A&F from an upscale sporting goods store, created by David Abercrombie and Ezra Fitch in 1892, into an upscale youth fashion retailer. The company recently hired Fran Horowitz as Brand President for Hollister, a subsidiary of A&F, to focus on the brand. Additionally, in late October 2014, it appointed Christos Angelides as the Brand President for A&F to expand the company into European markets. I believe Abercrombie & Fitch’s structural and operational initiatives will cause its turnaround plan to be successful and its market discount to evaporate.
ReplyDeleteBecause the idea of value investing is to find a stock that is undervalued within it's sector, value investors rarely, often never try to buy "the next big thing". They instead, find a company that is established already and instead of hoping for growth through sales, as a growth investor would, they look for companies that are already making money, or at least will very certainly make a lot of money in the future. Therefore, the most important thing for a value investor to look at in a company is said company's earnings and projected revenues for the future. I have chosen not to look at the sector that everyone is talking about right now, which is the technology sector. I have instead, looked for a sector that is doing quite well and is under discussed in the market. I believe a sector like that is the auto industry. Since the auto crash of the 2000s, people have decided that cars, especially american cars are a bad thing to invest in. However, since GM went public again after the government bailed them out, they have been doing very well. The "big 3" of american auto manufacturers(Ford, Chrysler,and GM) all had good years for the second or third consecutive year. Although stock in any of the "big three" may be undervalued, there are companies in that sector more undervalued than the big three. I believe these companies are the parts producers that build parts to be used in american cars. I think they are undervalued because they are just starting to sell to american car companies again, as well as foreign car companies that have plants in america, which are becoming more numerous. I have not found a specific company yet, but i believe this market is where I will find one.
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ReplyDeleteThe question of healthy and sustainable products becomes more urgent by the day. Stomachs turn as documentaries show the mass production of the food many consume. It seems that every week there is another new report in the news about America’s obesity problem. The average BMI of a middle-aged American man is 29, compared to BMIs closer to 25 for countries such as Japan, France and the Netherlands. To fight against this trend, many consumers, especially millennials, have put more focus on the quality and nutrition of their foods. In a world where there is a fast food restaurant every few miles, the ever-growing number of health-conscious consumers turn to stores like Whole Foods to buy their food. The motto of Whole Foods is “whole foods, whole people, whole planet”. It is clear that they are following this vision to this day, as evidenced by not only selling natural and organic products, but also by how often they appear in the news for being an all around ethically conscious company. Whole Foods has an “open salary” policy, which allows employees to look up the salaries of everyone else who works in the company. The lowest paid employees earn a living wage of $13.15 an hour with benefits and healthcare. John Mackey, co-CEO of the company earns a salary of $1. In terms of publicity, this is a breath of fresh air for the cynics of the new generation. Looking at the growth chart of Whole Foods, the company has an upward trajectory, growing consistently each year. Although the stock has taken a bit of a hit recently with other companies joining the market, the company has big plans on how they plan to stand apart, with a quality rating system and continuing to be as informative as possible – without raising prices. In addition, Whole Foods continues to be at the front of the pack in its industry with the highest growth and profit rate. As new consumers become more aware of the pressing need for sustainability, Whole Foods (WFM) will become the supermarket of the future.
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ReplyDeleteThe industry I would invest in is biotechnology. This in an industry that is growing quickly, especially as technology gets more and more advanced. Biotechnology can be used for many important things, some of which are becoming more prevalent as time goes on like the environment, genetic research, and healthcare. The industry is projected to become even more important due to a bigger population than ever being over 60 years old and higher population projectiles in third world countries. Medical research is something I am interested in investing in. I volunteer at a children’s hospital near my house and that experience has made me more passionate than ever about doing anything I can to help cure disease. Biotech is an industry that has had some controversy around it regarding DNA experiments, genetic modification, and the idea of cloning. I think this controversy is a good thing in terms of investing in a good biotech company because others will be scared to invest in it. Furthermore, after the biotech bubble of the 1980s, it has been rare for companies to receive FDA approval for blockbuster drugs.Therefore, to find a biotech start-up that has just received FDA approval would be perfect.
ReplyDeleteThe company that I would like to invest in is Disney. With the recent purchase of both Marvel and the rights to the Star Wars franchise, Disney has several movies that are sure to bring in big money from the box office. Although Disney is in a field that is sometimes elastic, it has proven to be durable and has consistently adapted to the quickly changing market. Disney is also a company that pays shareholders dividends, which is another reason to invest. Dividends generate more profit that can be reinvested. Also Disney has revenue generated from a wide range of products and audiences. Possessing ESPN, ABC, Hulu, A&E, along with the well known Disney subsidiaries, Disney proves to be a durable company. Having this range of audiences, if one subsidiary should fail, Disney still has countless other subsidiaries to buffer the loss and reestablish the company’s footing.
ReplyDeleteI want to invest in Desigual stock, because the spanish clothing brand has become extremely successful around Europe and is now beginning to enter American markets where it is likely to be very successful. It is currently targeting sales of 1 billion euros or $1.4 billion this year which is a giant increase from about 820 million in 2013 and 440 million four years ago. These changes in profit have mostly come from the expansion of the store to new countries within Europe. The store has now become extremely popular all around Europe and has begun to infiltrate american markets with stores in Las Vegas, Los Angeles, Miami, New York, and San Francisco. The fact that it has been able to open so many stores already suggests its success, and points to future success in the United States as well. The success of the brand in Europe has been extroardinary, and once the United States is added to its list of consumers the brand will likely grow to become even bigger. Some of the biggest brands in the United States started out as European focused brands including Chanel, Gucci, Louis Vuitton, Prada, H&M, and Zara which grew much more popular after their success in the United States. Desigual is likely to follow in the footsteps of these other European brands and grow with the infiltration of American Markets possibly challenging the success of other successful European brands.
ReplyDeleteI would like to invest in a swimming equipment provider. Interest about swimming has increased due to swimming programs started by former Olympians such as Lenny Krayzelburg. As the number of swimmers increases, equipment sales should increase as well. I believe that because swimming is becoming more prominent, swimming equipment sales will also increase and that investing in swim brand would be profitable.
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ReplyDeleteAmerican Superconductor
ReplyDeletehttp://247wallst.com/energy-business/2014/03/11/is-american-superconductor-the-next-big-alternative-energy-winner/
American Superconductor specializes in alternative energy and the production of superconductors (very efficient way to transfer electricity). In 2010 and 2011 the stock prices were up to $30 a share, and due to a trouble in a merger, the stocks dropped to $2 and is around that area currently. I believe that this stock will rebound and start to climb back up to its former glory. The quarterly loses seem to be going down each quarter and the profits are increasing steadily. The price that the stock is at right now is a steal, so if I buy it now and over the next couple year even comes close to the $30 share price of the past, the return will be great.
Independently of Walker, I would also invest in big data and cloud computing. For one, big data has several useful applications in the real world. First and foremost, its demand spans large corporations, universities and think-tanks, as well as smaller developers and individuals. More specifically, I would invest in the company, Splunk, based out of San Francisco, California. Splunk features an easy to use web style interface that allows users to search, monitor and analyze big data. Splunk, which was started in 2003, took a mere six years to become profitable, and since going public in 2012, has done exceedingly well despite large competitors like IBM. However, unlike IBM, Splunk focuses solely on big data and accessibility, allowing its product to be more honed and precise. Its consistent production of new, innovative software suggests that it will not only be a long term company, but will also be immensely profitable.
ReplyDeleteThe sector that I would like to invest in is Home Improvement Services, which includes companies such as Home Depot or Loews. My rational for this is that as the U.S economy continues to recover and the average American household begins to see an increase in their income, I would think that one of the most direct and common ways of spending that money would be into furniture, paint, or other home improvement products. Furthermore, many construction economies, whose success is directly tied to the state of the economy, buy and use home improvement products. An increase in their business should correspond in an increase of sales of these products. While home improvement products are not usually too expensive, people tend to have more time and money to spend during financially stable times, which would make sense as a reason for an increase in sales of such products.
ReplyDeleteThe modern age is characterized by a glut of information. This is evident on an individual scale. I post pictures and details of my life on various social media platforms; my iPhone tracks my sleep patterns and the number of steps I take; and Amazon can tell me exactly what brand of lightbulb I bought in fourteen months ago. Multiply my case by 2.9 billion (the current number of Internet users) or even just 1.5 billion (the number of smartphone users) and you have a lot of information. Big data companies that figure out how to monetize this wealth of personal data will make enormous profits. I’m willing to bet that Nielsen, N.V.., will be one of these companies. Nielsen already has a strong base in television ratings and other forms of consumer research; furthermore, it is swiftly expanding into analysis of mobile and Internet usage by way of large acquisitions, e.g., the $1.3 billion purchase of Arbitron (which measures radio, web and smartphone audiences) in 2013. Nielson has seen relatively steady growth over the past five years. A recent dip in the market price (from which the stock is already beginning to recover) makes it a good time to buy.
ReplyDeleteI would like to invest in the social media industry. As the world grows and technology increasingly develops, information is shared all across the globe quicker and more efficiently than ever before. This is a trend I do not see falling or rising sharply. I believe it will be a good investment because not only do people continually use social media to connect to others and find information, but businesses use social media sites, such as Facebook and Twitter, to advertise. Social media is beneficial to businesses because they will pay to know information that social media sites can get, such as email and age. In addition, I expect that it will continue to grow across the globe which will increase profits.
ReplyDeleteAs outlined by many others above, I would invest in the information/internet-related industry. In particular, I would invest in Tencent Holdings Limited, the fourth-largest internet company in the world and creator of QQ, an instant messaging site boasting 829 million users as of August 2014. QQ provides Tencent with a competition-free platform for related products, including social games (QQ Games), music (QQLive, QQ Player), blogging (Tencent Weibo), cloud storage (Tencent Weiyun), and online payment/shopping (TenPay).
ReplyDeleteIn addition, Tencent recently engaged in a 5-1 stock split, indicating a belief in future growth. This growth is likely to come from Tencent's other investments, including Dididache Taxi, a smartphone application which controls 60% of the taxi-hailing market in China, and a 92.78% equity interest of Riot Games, the creator of League of Legends, the most played PC game in the world.
I would invest in the Kroger Company, an American retailer that is the country’s largest supermarket chain by revenue. Kroger’s stock is currently at an all time high and has increased 40% since the beginning of 2014. Kroger’s management has achieved 43 straight quarters of rising sales at its stores due to its brilliant price strategy; Management has decided to give up higher margin pricing for lower, more affordable prices that can compete with Walmart and keep its customer core loyal. Kroger was also ahead of the market when it launched an organic and natural food initiative (Simple Truth and Simple Truth Organic Food). This almost prophetic move was well ahead of the consumer taste shift that followed. Kroger saw double-digit unit and sales growth year-over-year last quarter. In addition to these reasons, Kroger’s stock will continue to climb because of its aggressive expansion. In January, Kroger purchased Harris Teeter in January for $2.5 billion. With this acquirement, it is clear that Kroger intends to venture into new markets within the year, and specifically wants to open five to eight new stores per year, per region for the next decade. Also, Kroger is testing its “Click and Collect” program in Cincinnati. This program allows customers to order groceries online and pick them up at the store. An analyst at BMO Capital Markets believes the Kroger will be at the forefront identifying convenient grocery shopping options beyond traditional emerging programs. Also, fuel prices are currently declining and, generally, this increases the spending power of the consumer. Consequently, people will have more money to purchase Kroger Company’s products, increasing revenue and the value of Kroger’s stock. Also, Kroger has an apparently recession-resistant business model that kept profits afloat during the 07/08 financial crisis. Kroger recently bought back $1.57 billion of shares in stock. If the Kroger management is as adept at market prediction here as they were with the Simple Truth initiative then their company should be heading for a large uptick in the last two months of this year. Generally, food products are a relatively stable investment because food is a basic need that everyone has to buy. Thus, if Kroger is able to offer their products at competitive prices, they should be able to keep their stock value increasing. Additionally, the exponentially growing population means that the food industry is also constantly expanding, thus making grocery stores a relatively stable investment.
ReplyDeletePeople are living longer and require care for many years. This has caused health care spending in steadily increase. The generation of Baby Boomers has also begun to reach the stage where they need more and more assistance. This will and somewhat has created an insufficient supply of health care supplies and nursing homes. Cardinal Health is a company that is ready to take advantage of this and increase their stock price. They are partnered with CVS which is one of the largest pharmacies in the United States. This will give them a good place to market their goods to growing population of seniors who require everything from medication to walker to oxygen tanks.
ReplyDeleteTake-Two Interactive Software is a company that has the strength to not only compete with other entertainment companies but surpass them. Thanks to the most innovative and creative game development teams from around the world, their net revenue grew by 94% in the past fiscal year. During that year Rockstar, one of the 14 studios Take-Two owns, developed the most profitable entertainment release in history. This game has made the company over $1 billion since its release. They are on track to release other explosive and profitable titles in the near future. Take-Two’s teams from around the world develop a multitude of genres allowing them to target a massive audience. So far, the company has developed 40 titles that have sold millions of copies a piece. With the necessary durability to compete, and with future earnings on the way, Take-Two is a strong company to invest in.
ReplyDeleteJonah:
ReplyDeleteThe pharmaceutical industry is the industry I’ve chosen to look more carefully at, specifically the pharmaceutical companies investing significant capital into research for a vaccine against the Ebola virus. The vaccine industry has been known to neglect making vaccines for poorer countries yet the risk and the hype surrounding Ebola gives these companies an incentive to fund research. These companies can be seen at great value because of the potential they have for gaining a patent, thus, a monopoly over the market of prevention for Ebola. The inelasticity of such market would garner extraordinary profits for such companies.
I would choose to invest in Internet services, but specifically with an emphasis on web design. Now that commercial industries are using the Internet as a way to provide goods or services quickly and at a low price, companies are joining the online market as a way to increase their consumer base. Websites like Amazon are a major reason why consumers are looking to buy more products online. However, because Amazon makes such a small profit, almost all companies have their own websites as well. However, many smaller companies or companies led by people who cannot afford or do not want to hire expensive website designers exist. I believe that the market for inexpensive web design and graphic design services will continue to grow as more and more companies join the online shopping market. An example of a company in this sector is Squarespace, but it is a privately owned company. These types of companies allow people inexperienced in web design to have professional looking websites and increase commercial appeal. As new companies join the Internet’s commercial industry and as startups become more and more popular, inexpensive and easy web design companies will become more popular.
ReplyDeleteTechnology is a major factor for business and will continue to be so in the future. As a result I have chosen to focus on semiconductors, the industry that powers the technological one. The development of modern technology has been dependent on the improved performance rates of semiconductors. This sector has contributed largely to economic growth, but has suffered due to the rising costs of research and development (R&D) and for the upgrading of fabrication plants. Despite this, there are certain companies that I believe make for smart opportunities to invest in- such as Qualcomm. Qualcomm has increased its dividend by 20% annually over the past five years and has seen it's revenues grow at an annual rate of 17% over the last 10. Its biggest competitor, I would argue, is Intel. However, as smartphones have taken over the market Qualcomm has prospered while Intel is still largely reliant on personal computers.
ReplyDeletehttp://www.fool.com/investing/general/2014/09/23/is-intel-or-qualcomm-the-better-dividend-stock-to.aspx
http://seekingalpha.com/article/2180503-even-as-growth-slows-qualcomm-remains-undervalued
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ReplyDeleteI’d choose to invest in the software automation industry. With recent immense strides in not only hardware but software capability, the possibility & desirability of machines to overtake human tasks is a market that continues to grow. A notable example is self-driving cars; annually, ~30,000 people die a year due to car accidents. The proficiency of self-driving cars has already been demonstrated (Google has tested its self-driving car over 700k miles without requiring intervention), and Bosch Mobility has developed a self-driving solution, as well. The point is not to be perfect, but rather to be better than humans (and to be fair, we are comparatively abysmal). Software & hardware don’t get sleepy or stupid, they don’t overlook things out of neglect, and they possess the capability to process information sometimes faster than we can.
ReplyDeleteAlready, software automation has started to make its footprint in the workplace- automation suites like Quill allow for entire news articles to be written given an input of information, and such bots are being applied to scientific papers, as well. The practice of lawyering, which is long, time consuming, and involves the practice of sifting through large quantities of data, is being automated as well, and for good reason- software bots crush humans in efficiency, speed, and accuracy. However, nothing should be more foreboding of the potential for software automation than IBM’s Watson. We all know and love him as the robot that annihilated his human competition at Jeopardy, but Watson’s main design & purpose is to diagnose cancer patients, and is currently being tested at Sloan-Kettering. The implications here are enormous- most importantly, that such a bot would be in enormous demand due to its ability to evade things humans can’t such as understanding every possible medication’s reaction with every other medication, or simply to reduce the misdiagnosis rate in hospitals. That software automation is already beginning to take on some of the most complex human endeavours should be telling of its enormous potential for growth across society.
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ReplyDeleteI would invest in Live Nation Entertainment Inc. Live Nation Entertainment operates through concerts, ticketing, Artist Nation, sponsorships and advertising segments. Live Nation Entertainment will do well because it has a strong online presence and a stake in over 250 great artists' music. Live Nation Entertainment also owns many entertainment venues, over 100 in North America, and 85 more internationally. Live Nation Entertainment recently acquired Ticketmaster Entertainment, and works closely with HOB Entertainment. Its equity to debt ratio is good, and it has very little competition. Live Nation Entertainment is also a pretty inelastic good for many performers because it owns many prestigious music halls. Live Nation Entertainment's advertising ability draws many artists, and Artist Nation manages around 250 artists' music as well as merchandise. Its online presence is strong, and its revenue continues to grow. I think Live Nation Entertainment is a great investment opportunity.
ReplyDeleteI would invest in big data and cloud computing. As technology becomes ever smaller and more common, the amount of data available to advertisers, product developers, and many others will explode. Recently, the big news is digitized health information. The Apple Watch, Microsoft Band, and many others collects data such as heart rate. This data could be mined for many valuable insights, and the company to do so will probably reap a rich reward as it can provide useful information to practically all areas of industry.
ReplyDeleteHowever, a lot of computing power is needed to explore that data, and many companies can’t afford the expensive hardware necessary. Cloud computing and software-as-a-service can help this by essentially renting out hardware. A good example is Amazon’s AWS, which allows users to rent server time for whatever they want. Overall, as data becomes more prevalent, big data will be ever more important, and cloud computing and SaaS can help provide the necessary computing power.
I would like to invest in the auto industry. Especially in light of the recent bailouts in Detroit, I believe that the industry as a whole is undervalued, especially American companies. Investors are reluctant to place their money in an industry that is fresh out of failure. I am interested in Tesla in particular. Backed by Paypal founder Elon Musk, Tesla cars are powered by an electric motor designed by Nikola Tesla 126 years ago. They have no engine, no tailpipe. Car owners simply plug their cars into an outlet in their garage to charge the battery, which powers a small motor. Typically with electric cars, range is an issue– how far can the car go without dying? Tesla has quelled this fear with its free “supercharge” stations, located halfway between most major cities. The Tesla Model S can go up to 260 miles on a single charge. Even though the Model S is relatively expensive for a car (starting at $69,900), the company has been able to sell every model without spending any money on advertising, becoming one of the best-selling luxury car brands in America. The company is very committed to safety (scoring 5.4 out of 5 stars from the National Highway Safety Administration, the highest safety rating ever awarded to any car), as well as customer service. Several years ago there was a problem with one of their cars catching fire in a crash and the company offered to modify every one of the vehicles they’d sold to be safer, free of charge. Over the past few years, the stock has experienced a meteoric rise in value, growing over $200 since 2010.
ReplyDeleteI would invest in Fast Retailing. Fast Retailing is a Japanese umbrella company that houses many up and coming clothing companies, including UNIQLO and J-Brand. Uniqlo is the fastest growing clothing company in the world, based out of Japan. It is similar to H&M but better quality and with more variety. UNIQLO has recently had collaborations with major designers such as Russian Alexander Plokhov who heads fashion powerhouse Helmut Lang, re-released pieces from their best selling +J collection which was a collaboration with Jil Sander, and had collaborations with Japanese niche brand Undercover, Michael Bastian, and more. It is already very popular in Asia, and has one store in New York that is doing extremely well. It will soon open one in Chicago and target more of the western US, and I expect it to do very well there because of its accessibility, price point, quality, and ultra-faithful network. J-Brand is an up and coming denim company that is following a similar path to uniqlo, but with a focus on jeans. Fast Retailing had a 23.1% growth in 2013, and a 74.6% growth in Market capitalization. These clothes are also very durable, in terms of the market. Their modern cuts and nicely balanced color palette, as well as the passion their owners have for clothes shows that they will do very well in the future, especially if they continue their trend of collaborations with major designers. Because of its sub-company Uniqlo’s imminent movement into the midwest and west, Fast Retailing has a lot of potential and would be a great company to invest in.
ReplyDeleteI'd like to invest in an audio platform like Soundcloud.
ReplyDeleteSoundCloud Ltd. operates SoundCloud, an audio platform that enables customers to create, record, promote, and share their originally-created sounds across the Internet. It allows sound creators to instantly record audio on the site or through mobile applications, and shares them publicly or privately; embed sound across Websites, social networks, and blogs; and receive feedback from the community. The company was founded in 2007 and is based in Berlin, Germany.