Creating a Stock Portfolio for your Client:

Overview:

You are an equity investment analyst for a small financial advisory firm. You are tasked to build a portfolio of stocks for your client (Lucy). The portfolio must contain no more than 12 stocks and be chosen from the attached list of 24 stocks. You must build the portfolio based on the investment criteria of the client. After building the portfolio, write a one-page memo about the clients portfolio. Explain what approach you used to create the portfolio, what stocks you picked, how much of each and why. How is the portfolio expected to perform (anticipated returns) over the clients investment time horizon, whether it provides annual income and discuss how risky is the portfolio? The portfolio needs to be highly customized to that clients objectives.

Client:

Lucy Steamboat is a 65-year-old retired teacher. She has combined net assets of $2 million. Her assets are properly balanced between stocks, bonds and cash and she is living comfortably on her retirement, social security payments and pension amounts. She would like you to construct a portfolio of stocks of $1 million. She is relatively risk adverse. She also like for her stocks to provide current income (payments) each year in addition to growing in value if possible. Her personal discount rate is 4% and her tax rate is 15%. Her investment time horizon is 3 years.

INSTRUCTIONS:

This assignment requires you to write a 1-page memo. Please do this in Word Doc as well as show your calculations in Excel Doc.

Current Earnings Current Dividend ($ per share) Beta per share (EPS) 0.72 1 yr 3 yr avg. 1yr growth 3yr growth growth growth rate % rate % rate % rate % share share dividend dividend price price 4.74 3.79 4.74 3.79 6.32 5.05 6.32 5.05 0.75 1.89 8.88 0.00 0.72 14.40 3.00 4.74 3.79 4.74 3.79 0.51 2.25 5.05 6.32 5.05 1.04 10.40 3.71 6.32 4.21 3.00 3.37 4.21 3.37 0.96 1.50 3.00 4.21 3.37 4.21 3.37 0.61 1.88 1.50 5.79 4.63 5.79 4.63 1.67 1.74 0.75 6.32 5.05 6.32 5.05 1.43 0.91 7.14 3.75 5.26 4.21 5.26 4.21 9.44 3.37 4.21 3.37 0.34 Current Shares Market Stock / share price Industry outstanding Capitalization Company ($ per (millions) (mils) share) Achaean Automotive 32.00 23.25 744.00 Adversa Education 148.00 13.02 1926.96 Allonym Clothing 80.00 18.60 1488.00 Amiens Banking 130.00 20.46 2659.80 Apprentice Consumer Products 53.00 22.32 1182.96 Bebeeru Pharmaceuticals 10.00 11.16 111.60 Bedmaking Insurance 94.00 9.54 896.76 Bloomingly Clothing 58.00 18.60 1078.80 Buganda Education 51.00 9.30 474.30 Callowness Consumer Products 118.00 15.81 1865.58 Caponised Banking 54.00 19.53 1054.62 Cashingly Clothing 100.00 12.09 1209.00 Channeling Airline 98.00 9.30 911.40 Chattiness Healthcare 34.00 6.51 221.34 Contortive Consumer Products 20.00 8.37 167.40 Creakiness Entertainment 43.00 11.16 479.88 Currycomb Pharmaceuticals 32.00 12.23 391.36 Curtailment Financial Services 78.00 7.44 580.32 Curtius Healthcare 100.00 17.67 1767.00 Danava Entertainment 88.00 2.79 245.52 Dermotherm Consumer Products 100.00 13.95 1395.00 Deweyan Electronics 85.00 1.86 158.10 Diclinism Energy 67.00 17.67 1183.89 Doryman Education 48.00 14.88 714.24 3.75 3.00 4.21 2.63 6.48 2.11 2.63 2.11 0.88 12.00 3.75 3.16 2.53 3.16 2.53 1.92 7.84 3.75 5.26 4.21 5.26 4.21 1.88 2.30 0.00 2.11 2.63 2.11 1.74 2.63 5.79 2.20 4.63 5.79 4.63 1.28 1.50 0.00 2.15 5.79 4.63 5.79 4.63 0.89 1.60 0.75 6.84 5.47 6.84 5.47 1.91 9.36 0.00 4.21 3.37 4.21 3.37 0.71 8.00 1.50 5.26 4.21 5.26 4.21 1.59 2.25 4.21 3.37 4.21 3.37 1.43 1.76 23.00 10.20 0.00 6.32 5.05 6.32 5.05 1.27 1.50 4.21 3.37 4.21 3.37 0.93 1.68 0.00 4.21 3.37 4.21 3.37 1.75 0.96 1.92 2.25 3.68 2.95 3.68 2.95 Current Earnings Current Dividend ($ per share) Beta per share (EPS) 0.72 1 yr 3 yr avg. 1yr growth 3yr growth growth growth rate % rate % rate % rate % share share dividend dividend price price 4.74 3.79 4.74 3.79 6.32 5.05 6.32 5.05 0.75 1.89 8.88 0.00 0.72 14.40 3.00 4.74 3.79 4.74 3.79 0.51 2.25 5.05 6.32 5.05 1.04 10.40 3.71 6.32 4.21 3.00 3.37 4.21 3.37 0.96 1.50 3.00 4.21 3.37 4.21 3.37 0.61 1.88 1.50 5.79 4.63 5.79 4.63 1.67 1.74 0.75 6.32 5.05 6.32 5.05 1.43 0.91 7.14 3.75 5.26 4.21 5.26 4.21 9.44 3.37 4.21 3.37 0.34 Current Shares Market Stock / share price Industry outstanding Capitalization Company ($ per (millions) (mils) share) Achaean Automotive 32.00 23.25 744.00 Adversa Education 148.00 13.02 1926.96 Allonym Clothing 80.00 18.60 1488.00 Amiens Banking 130.00 20.46 2659.80 Apprentice Consumer Products 53.00 22.32 1182.96 Bebeeru Pharmaceuticals 10.00 11.16 111.60 Bedmaking Insurance 94.00 9.54 896.76 Bloomingly Clothing 58.00 18.60 1078.80 Buganda Education 51.00 9.30 474.30 Callowness Consumer Products 118.00 15.81 1865.58 Caponised Banking 54.00 19.53 1054.62 Cashingly Clothing 100.00 12.09 1209.00 Channeling Airline 98.00 9.30 911.40 Chattiness Healthcare 34.00 6.51 221.34 Contortive Consumer Products 20.00 8.37 167.40 Creakiness Entertainment 43.00 11.16 479.88 Currycomb Pharmaceuticals 32.00 12.23 391.36 Curtailment Financial Services 78.00 7.44 580.32 Curtius Healthcare 100.00 17.67 1767.00 Danava Entertainment 88.00 2.79 245.52 Dermotherm Consumer Products 100.00 13.95 1395.00 Deweyan Electronics 85.00 1.86 158.10 Diclinism Energy 67.00 17.67 1183.89 Doryman Education 48.00 14.88 714.24 3.75 3.00 4.21 2.63 6.48 2.11 2.63 2.11 0.88 12.00 3.75 3.16 2.53 3.16 2.53 1.92 7.84 3.75 5.26 4.21 5.26 4.21 1.88 2.30 0.00 2.11 2.63 2.11 1.74 2.63 5.79 2.20 4.63 5.79 4.63 1.28 1.50 0.00 2.15 5.79 4.63 5.79 4.63 0.89 1.60 0.75 6.84 5.47 6.84 5.47 1.91 9.36 0.00 4.21 3.37 4.21 3.37 0.71 8.00 1.50 5.26 4.21 5.26 4.21 1.59 2.25 4.21 3.37 4.21 3.37 1.43 1.76 23.00 10.20 0.00 6.32 5.05 6.32 5.05 1.27 1.50 4.21 3.37 4.21 3.37 0.93 1.68 0.00 4.21 3.37 4.21 3.37 1.75 0.96 1.92 2.25 3.68 2.95 3.68 2.95