Friday February 21st, 2014

Lafayette College Investment Club

Meeting Agenda1) Market Update

2) AT&T Pitch (BUY T, SELL VZ)

3) Financial Statement Overview

4) Announcements

Market Update

By: Chris Ulyett and Ryan McCormick

Buy American

Many analysts predict “Made in the U.S.A.”

Three Reasons China’s Economy U.S energy independence Skills and innovation

Labor Market

U.S. workers are slowly getting bolder and shedding caution

Quitting rate reported at 1.8% November 2013

Average quitting rate is 2.1%

Most Recent low in quitting rate 1.2% in September 2009

Suspension of Debt Ceiling

Extends the government's borrowing authority until March 2015

The first time since 2009 Congress has passed a "clean" debt limit.

Farm Bill• Added insurance for agriculture sector

• $7 Billion in aid for ranchers and farmers nation wide

• $8 billion cut to food stamps

Changes At Coca Cola• CFO Gary Fayard will retire

• To be replaced by veteran Kathy Waller

• Waller announced $1bn cut in costs this year in response to down quarter

Market• Ends at week high in DOW and S&P 500

• DOW gained 0.6%

• S&P 500 gained 0.6%

• Eurofirst 300 gained 0.01%

• Shanghai dropped 0.18%

• Gold down 0.3% to $1,317

Buy AT&TDump Verizon

NYSE: T, VZ

Industry: Telecom Services

Company Descriptions

Multinational broadband & telecommunications

Operates in wireless, wireline, broadband television subscription

Share an oligopoly with each other

Performance in Sector

Combined AT&T and Verizon dominate the mobile wireless and broadband market.

FCC reports that the companies enjoy 60% of revenue

So, why sell Verizon (VZ)? Overvalued.

P/E (ttm) of 12.03 (but isn’t this good? Not in this case!)

Investing too much in wireless market. Single focused.

Only owns 55% of its most lucrative division VZ Wireless

Get out now, yield benefit.

VZ (FiOS) is underperforming to keep up with AT&T (U-Verse) wireline

Overview: Why Invest in AT&T?

AT&T invested in future growth.

Long-term dividends!

“Our dividend is clearly a sacred matter for us.” CFO John Stephens

Dominant in wireline business (broadband and video offerings).

Forward thinking management team: overseas investments.

The Numbers: Why Invest in AT&T?

29 consecutive years of increased dividends. Now at 5.6%

CEO Randall Stephenson has a vision for growth in European market

Currently stock is discounted because VZ is perceived to have stronghold.

Expected 6.5% earnings growth.

Trading at lower P/E (ttm) ratio (9.79) and higher yield than Verizon

Financial StatementsOthman Guennoun

Irvin Cedillo

February 14th, 2014

The 4 Financial Statements

Income Statement

Statement of Retained Earnings

Balance Sheet

Statement of Cash Flow

They all flow into one another

Why are they used?Important reasons:

Show performance A mean for investors to measure a companyHelps the managing team make important

decisions

The Income Statement

Basic Formula:

Revenues – Expenses = Net Income or Net Loss

The Statement of Retained Earnings

Basic Formula:

Beginning Retained Earnings + /– Net Income – Dividends Declared = End Retained Earnings

Net Income from the Income Statement

The Balance SheetOther name: Statement of Financial Position

Snapshot of a company on a specific day

Basic Formula:

Assets = Liabilities + Stockholder’s Equity

Assets: Economic resources to benefit the future of the company

Current: Cash, Supplies, Inventory

Non Current: Land, Equipment, and Buildings

Liabilities: The company’s debt

Current: needs to be paid back within a year

Long Term: over a year

Equity: Retained Earnings, Common Stock, APIC

Statement of Cash FlowOperating Activities

Investing Activities

Financial Activities

Shows what the company is doing throughout years.

Expand?

Net Income in all 4 statements

RatiosCurrent Ratio

Use ratios to compare companies (competitors)

Important Announcements1) Potential Speakers coming ….

Bennett GoodmanCharles Chesebrough

2) Fleece Trivia ContestCurrently designing a trader like fleece to be given

to select students who answer correct questions

3) Board Meetings Will Be held in 12:15 Simon Lobby If you would like to be added to chain email please

see me after meeting (board or member)

4) For next week look at BAC we are going to pitch a sell