Before investing, a wise investor should determine whether the investment under
consideration makes financial sense. Therefore, building an Investment case is the
first step for presenting a compelling case for investment. While the content of an
Investment case can be very various, there are a minimum of four sections (investment
case, sector outlook, fundamental analysis and risk analysis) which are “mandatory”
in order to make a decision about a specific investment. Notice that the information
requested to fill this coursework is publicly available. The student will be assessed on
the basis on how well and concisely this information is processed and presented as a
convincing case for investment (or not).
The investment case
This section provides some background information on the stock under consideration.
It paints a picture of the profile and historical price of the stock. You will also
summarize, at the end of this section, the characteristics of your stock and why you
recommend to invest (or not) in it according to the three analyses below.
The sector outlook
A sector outlook must provide an investor with an idea of how well companies within
a particular sector are expected to perform as a whole. After examining different
industrial sectors, select the sector (for example: Healthcare) that is forecast to
outperform the stock market. Analyse in deep the sector performance. Some of the
most common questions to ask may include:
• What products and services does the sector offer?
• How fast is the sector growing and why?
You can search from:
An example: Markets-Stocks-Stock Screener- Healthcare (for example). Here, you
see an overview of the Companies in the Healthcare Sector, with their Ratios, Price,
Volume, Fundamentals and Dividends and Technical recommendations (buy or sell).
You must compare that stock with the average performance of the sector overall to
see and justify that investing in the specific stock is a prominent investment (or not).
You have a lot of information in here: Charts, News and Analysis, Experts opinions,
Financials and Forum, to support your case. The main goal in this section is to
determine your competitors’ strengths and weaknesses while evaluating your own
stock, and to identify the strengths, advantages of your company over the competitors.
The Fundamental/Financial analysis is certainly a critical and vast component of the
story. If your opportunity will not provide an adequate financial return, you should give
up this investment. Fundamental analysis determines the health and performance of
an underlying company by looking at key numbers and economic indicators. For
stocks and equity instruments, we look at revenues, earnings, future growth, return on
equity, profit margins and other data to determine a company’s underlying value and
potential for future growth. In terms of stocks, fundamental analysis focuses on the
financial statements of the company and financial ratios being evaluated to gain an
insight into a company’s future performance. As a result, it brings up an intrinsic value
to give the recommendation to buy or sell a particular stock. Fundamental analysis
relies mainly on two steps to identify the Investment opportunity: Financial analysis of
the company and Valuation.
Risk analysis is the study of the underlying uncertainty associated to the returns
(variance of stock returns and possible future economic states). Risk analysis must be
in the case of your coursework, a qualitative risk analysis involving a written definition
of the uncertainties, an evaluation of the extent of the impact if the risk ensues, and
countermeasure plans in the case of a negative event occurring.
Example of a qualitative risk tool is the SWOT Analysis. SWOT analysis is a process
that identifies a company’s strengths, weaknesses, opportunities and threats (this is
only a suggestion, you can structure this part of your report in a different way).
You can also have a quantitative part, presenting a scenario analysis, however it is up
to the group to decide if they want to include both (quantitative and qualitative).
Write some references in Harvard style. Do not include References in the word count.
The Companies are:
- Wynn Resorts
- Manchester United
- Costco Wholesale Corp.