stock picking
DESCRIPTION
Reasearching stock projectTRANSCRIPT
RESEARCHING AND STOCK PICKING
H a s a n Z a i d i
M r M a c p h a i l
0 2 - O c t - 1 2
Champion
This is my stocking portfolio where I have picked stocks
based on different types of stock. The types stock I choose
were Blue Chip, Turn around and Cyclical.
INDEX
Home Depot
Stock Type ……………………………………………………………………….Page 2
Business Summary……………………………………………………………Page 3
Why Invest? ..........................................................................Page 4
Yahoo
Stock Type ………………………………………………………………………Page 7
Business Summary………………………………………………………… Page 7
Why Invest? ……………………………………………………………………Page 8
Ford Motor
Stock Type: ……………………………………………………………………..Page 10
Business Summary……………………………………………………………Page 10
Why Invest? …………………………………………………………………….Page 11
Bibliography …………………………………………………………………….Page 13
1
1. https://corporate.homedepot.com/OurCompany/History/Pages/default.aspx
2. http://ycharts.com/companies/HD/market_cap
3. http://seekingalpha.com/article/896281-a-close-look-at-home-depot-cautiously-optimistic-
outlook?source=marketwatch
4. http://ycharts.com/companies/HD/dividend_yield
2
Stock type:
Home Depot was founded in 1978 by Bernie Marcus and
Arthur Blank. The founders Bernie and Arthur vision was
of a one-stop shopping for do it yourself, which came to
alive when they opened their first 2 Home Depot stores
on June 22, 1979. In 1984 the Home Depot opened its
100th store which demonstrated enormous growth span
over the 9 years! 1 As of now September 2012 Home
Depot market capitalization is 92.41B, making it a large
company.2 The company has operating margins of
10.08% over the last 12 months and a profit margin of
5.96%, which is significantly greater than competitors Lowe's and Lumber Liquidators.3
Due to high profit margin compare to other companies and its main competitor Lowes, it
makes Home Depot as a leader in its industry.Home depot has paid dividends
throughout history of its creation, if you look at the image below it shows its 10 year
dividend history rate.4
Some characteristics of a “blue chip” company YES NO
Longevity X
Excellent Financial Shape
X
Entrenched as leader in its field
X
Pays Dividends X
5. http://www.homedepot.ca/corporate-affairs
3
Business summary
Home Depot main branch is currently located in 2455 PACES FERRY ROAD, N.W.
ATLANTA, GA 30339 United States. Home Depot follows its slogan “do-it yourself”, and
also does home improvement, construction and building maintenance. If customers
need professional help to renovate their homes, then Home Depot provides
professionals to do the job. Home Depot is also a rent house for tools for professional
customers, including repair and remodel contractors, special services who don’t have
variety of tools. The Home Depot operates 180 stores across Canada with space of
average more than 100,000 square feet, with approximately 20,000 square feet of
outdoor seasonal space. Home Depot has more than 40 000 items stocked in its each
shop for customers. Home Depot is traded at NYSE and is included in the S&P 500
Index and the Dow Jones 30 Industrial Index.5
Ticker symbol HD
52 week high 60.58
52 week low 31.03
Current share price $60.37
Competition Lowes, RONA, Home hardware
1. https://corporate.homedepot.com/OurCompany/History/Pages/default.aspx
2. http://ycharts.com/companies/HD/market_cap
3. http://seekingalpha.com/article/896281-a-close-look-at-home-depot-cautiously-optimistic-
outlook?source=marketwatch
8. http://ycharts.com/companies/HD/dividend_yield
4
Why invest:
Home Depot since opening its first store went on and expanded to 100 stores in just
span of 9 years, from 1979 to 1989! Their mission statements do it yourself, and with
home depot providing expertise along the way, as well as merchandise and tools
caused them to grow into a huge corporation.1 Looking at Home depot financial records
from 2008 to 2012 its profit and revenue income has increased drastically as shown in
the image 1 on the next page.2 As you can see from the image 1, from 2008 to 2011 the
revenue decreased drastically from 77.35 B to 68B, but in 2012 it went back up to 70B
which show signs of recovery in the industry. The gross income decreased as well from
2008 to 2011 24.3B to 21.69B, but in 2012 it increased to 22.69 B making it highest
gross income after 2008. If you look at image 2 posted below image 1, you can see the
comparison over the years of revenue vs. operating income vs. operating margin, and
revenue vs. net income and profit margin3. The operating income has increased in 2012
and same as revenue. Basically this all shows a sign of recovery in the home depot
company, which means in the future there is a good chance of the stock rising. Home
Depot shares have been trading higher over the last year, making it one of the best
performing large cap stock. Surprisingly Home depot has a higher returned gain 79 %
more than Apple, showing that Home depot is more of a better choice as an
investment.3 Even though Home depot has a yield of 1.90% which is not attractive
enough for the investors, but its ability to increase margin, cut cost and remain stable
during the tough economic times, shows excellent management and efficient executive
staff.8 Those are the reason why I would invest in Home Depot for long term rather than
short term. By investing in long term there is a huge chance that Home Depot will be
making more money and share prices going up, which all of it depends on current real
estate market which is improving.
5
1.
2.
6
1. http://docs.yahoo.com/info/misc/history.html
4.http://money.cnn.com/2012/09/26/technology/yahoo-strategy/?source=cnn_bin
7
Stock type:
Yahoo was started by David Filo and Jerry Yang, Ph.D. candidates in Electrical
Engineering at Stanford University, originally they created yahoo for their guide in a
campus trailer in February 1994 as a way to keep track of their personal interests on the
internet. Since then Yahoo went on to become one of the most successful companies
around the world in search engine.1 Recently yahoo has come out with a turn around
strategy by their newly hired CEO Marissa Mayer, which involves answering the
question what is yahoo? Over the past few years yahoo went from being one of the best
search engine to Microsoft associated bing search engine. The CEO is trying to redefine
yahoo into more user friendly web service. CEO will give employees more control of
their projects and launch them if they have potential to generate over $100 million dollar
revenue. Marissa Mayer is also firing old management and bringing in new faces,
recently Chief Financial Officer Tim Morse left the company. Lastly Yahoo is going to
buy small companies, unlike before when they bought small companies were usually for
the products but now it’s for tech talent.4
Business summary:
Yahoo main branch is located in 701 First AvenueSUNNYVALE, CA 94089 and it’s
traded in NASDAQ.1 Yahoo is basically like Google offers everything that Google does,
except mobile services. Yahoo has its own platform of mail, messenger, search engine
and news. Yahoo has over a million users and site visitors who use yahoo daily. Yahoo
market cap is 18.88B and its revenue for most recent quarter is 1,217.79M.4
Ticker symbol YHOO
Current Share Price 15.98
52 week high 16.79
52 week low 13.11
Competition: Google, AOL, Microsoft (bing).
5. http://www.crunchbase.com/person/marissa-mayer
6.http://www.cnbc.com/id/49246547
7. http://ycorpblog.com/2012/09/25/ken-goldman-cfo/
8
Why Invest
I believe the new CEO has taken a lot of positive steps toward change. But before all
that we have to look into the new CEO profile, she was a chief executive of Google and
was a key figure in product management and design efforts for Google web search,
images, news, books, products, toolbar, and iGoogle. She has been recognized by
Fortune magazine has listed her for the past 3 years on their annual Most Powerful
Women’s list, and she was the youngest ever to appear on the list, furthermore also
contributions and leadership have been recognized by numerous publications including
the New York Times, Newsweek and BusinessWeek.5 Judging from her past
contribution and recognition by various magazine and newspaper, she has the ability to
change yahoo around, she also brings experience from her past working with Google
that will bring more creative ideas to the table. As of now recently Chief Financial Officer
Tim Morse has left the company. Morse, who kept a tight rein on finances since he took
over as CFO in 2009, will be replaced by Ken Goldman, the CFO of Fortinet who has
three decades of experience at software and Internet companies, including Siebel
Systems.5 Ken Goldman is one of the most respected and accomplished CFO in the
technology industry with over 25 years of experience.7 When Ken Goldman was in
Siebel Systems he was the key figure that helped restructure the whole company, which
is what yahoo exactly needs.6 I believe the reason yahoo was down for couple of years
was because regular CEO changes, yahoo went through 4 CEO in 2 years, which
resulted in lack of top leadership. Another reason yahoo was down because of its
pervious 2 CEO one of them been Jerry Yang who reject Microsoft offer to buy yahoo
and Scott Thompson who had problems with his resume.6 Therefore, I would invest in
yahoo short term since the strategy is it’s in beginning phases so it could take a while
before we get to know how everything is going on. Image shows that revenue is rising
slightly.
9
1. http://www.theautochannel.com/news/2012/06/01/038126-ford-motor-company-posts-gains-
across-cars-utilities-trucks-may.html
2. http://www.companyspotlight.com/15733/Ford-Motor-Co
10
Stock type:
Ford motor company is an American based automaker and countries #1 top company
selling automaker.1 It is also one of the top 10 companies in world automaker industry.
Ford was founded by Henry Ford in Dearborn, Michigan and was incorporated on June
16, 1903, since then the company has gone to become one of the most successful
companies and was one of the few survivors of great depression. Ford Motor produces
cars, trucks and sells them worldwide.
Business summary:
Ford is currently located in 1735 Sydney Rd CAMPBELLFIELD, VIC, 306, and it trades
in NYSE. Ford Motor Co. produces automobiles and sells them across the world. It
produces cars, trucks, the company also engages in other business; financing vehicles.
Its automobile industry includes Ford and Lincoln.2
Ticker symbol F
52-week high $13.05
52 week low $ 8.82
Current share price $10.09
Competition: Honda, Toyota, GM
1.http://www.theautochannel.com/news/2012/06/01/038126-ford-motor-company-posts-gains-across-
cars-utilities-trucks-may.html
3.http://www.google.com/finance?q=NYSE%3AF&fstype=ii&ei=eapoUOj9LIb_qAGE4gE
5. http://seekingalpha.com/article/895511-3-reasons-to-buy-ford-now-for-a-long-term-investment
6. http://www.opposingviews.com/i/politics/ford-motors-nysef-teamed-weyerhaeuser-nysewy-make-
automotive-applications-utilizing
11
Why invest
Even though we are going through tough economic times, with Europe in debt crisis
causing cyclical stocks like Ford sale to drop, but I still believe Ford is still a good
investment for long term for these reasons: Ford's 3.17% sales shortage throughout the
past five years is the lowest amongst these automakers (Honda, Toyota, and GM).
Ford's 158.4% ROE (return on equity), 4.6% operating margin and 7.2% profit margin
are the highest among these automakers as well.5 In August Ford sales dropped by
2.3% 5 causing its shares to go down because of Europe crisis but looking at the image
13 you can see that investors are starting to reinvest in ford and its share price are going
up which possibly means cyclical stocks like Ford are going up. Ford is coming up with
a new technology with the help of Weyerhaeuser Company, which will increase the
process rate of the cars and save more fuel. The new technology is using tree fiber to
make plastic “cellulose” in its few plastic composites used to manufacture its vehicles.
The company said that it can significantly decrease carbon dioxide discharge and
weight by using cellulose in automotive applications.6 Pace of processing can be
increased up to 40 percent. Ford Company used soy bean competent in its
manufacturing which saved approximately 5,000,000 pounds of petroleum every year.6
This means the Ford cars are eco friendly and take a lot less gas making it ideal
company in the future for car use, since oil prices these days are higher. Ford has a
strong background history it was one of the few companies to survive the first great
depression in the 1940s.1 It’s been over 100 years since ford was created by Henry
Ford and it went out to become one of the most profitable companies in the world. Ford
was considered to be a blue chip company at some point.7
12
1.
2.
13
Bibliography:
"History." Home Depot. N.p., n.d. Web. 2 Oct. 2012.
https://corporate.homedepot.com/OurCompany/History/Pages/default.aspx.
"Home Depot inc." Market Watch. N.p., n.d. Web. 29 Sept. 2012.
<http://www.marketwatch.com/investing/stock/hd/financials>.
"The Home Depot, Inc.: NYSE:HD quotes & news - Google Finance." Google. N.p., n.d. Web. 2 Oct. 2012.
<http://www.google.ca/finance?client=ob&q=NYSE:HD>.
Baldwin, Amy. "A Close Look At Home Depot: Cautiously Optimistic Outlook - Seeking Alpha." Stock
Market News & Financial Analysis - Seeking Alpha. N.p., n.d. Web. 2 Oct. 2012.
<http://seekingalpha.com/article/896281-a-close-look-at-home-depot-cautiously-optimistic-
outlook?source=marketwatch>.
"HD: Summary for Home Depot, Inc. (The) Common S- Yahoo! Finance." Yahoo! Finance - Business
Finance, Stock Market, Quotes, News. N.p., n.d. Web. 2 Oct. 2012. <http://finance.yahoo.com/q?s=HD>.
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"Affairs." Home Depot. N.p., n.d. Web. 2 Oct. 2012. <www.homedepot.ca/corporate-affairs>.
"History." Yahoo! Finance . N.p., n.d. Web. 2 Oct. 2012. <docs.yahoo.com/info/misc/history.html>.
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"Yahoo! Inc.: NASDAQ:YHOO quotes & news - Google Finance." Google. N.p., n.d. Web. 2 Oct. 2012.
<http://www.google.com/finance?cid=658890>.
"Marissa Mayer's Yahoo turnaround starts to take shape - Sep. 26, 2012 ." CNNMoney - Business,
financial and personal finance news. N.p., n.d. Web. 2 Oct. 2012.
<http://money.cnn.com/2012/09/26/technology/yahoo-strategy/?source=cnn_bin>.
"Marissa Mayer | CrunchBase Profile." CrunchBase, The Free Tech Company Database. N.p., n.d. Web. 2
Oct. 2012. <http://www.crunchbase.com/person/marissa-mayer>.
Brodie, Lee. "Yahoo! Finally a Stock to Shout About: Cramer - Mad Money - CNBC." Stock Market News,
Business News, Financial, Earnings, World Market News and Information - CNBC. N.p., n.d. Web. 2 Oct.
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14
"Veteran Finance Leader Ken Goldman to Join Yahoo! as CFO | Official Yahoo! Blog - Yodel Anecdotal ."
Official Yahoo! Blog - Yodel Anecdotal . N.p., n.d. Web. 2 Oct. 2012.
<http://ycorpblog.com/2012/09/25/ken-goldman-cfo/>.
"Ford Motor Company May 2012 Sales - Gains Across Cars, SUV's, Trucks; Fusion Sets Sales
Records." 2013 Car Reviews, 2012 Car Reviews, 2011 Car Reviews, New Car Research, Used Car
Research, TACH-TV Car Videos, Automotive News | The Auto Channel Super Blog. N.p., n.d. Web. 2 Oct.
2012. <http://www.theautochannel.com/news/2012/06/01/038126-ford-motor-company-posts-gains-
across-cars-utilities-trucks-may.html>.
"Ford Motor Co. | Company Spotlight Profile." Company Spotlight. N.p., n.d. Web. 2 Oct. 2012.
<http://www.companyspotlight.com/15733/Ford-Motor-Co>.
"Financial Statements for Ford Motor Company - Google Finance." Google. N.p., n.d. Web. 2 Oct. 2012.
<http://www.google.com/finance?q=NYSE%3AF&fstype=ii&ei=eapoUOj9LIb
"FORD MOTOR CO (F:New York): Stock Quote & Company Profile - Businessweek." Investing & Stock
Research by Company and Industry - Businessweek. N.p., n.d. Web. 2 Oct. 2012.
<http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?ticker=F>.
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<http://seekingalpha.com/article/895511-3-reasons-to-buy-ford-now-for-a-long-term-investment>.
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automotive-applications-utilizing>.
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