The goal of this second stage in our equity analyst project is to select one industry out of this list of 24 whose performance prospects you determine are best over the next year. Here are some factors to consider when comparing industry groups:[1]

Degree of Competition in the Industry

Supply/Demand Dynamics for the Industrys Products

Industry Cost Structure

Degree of Government Regulation-Favorable or Not

Exposure to the Business Cycle

Relative Financial Norms and Standards

Your team is asked to write a 5-10 page paper providing your analysis of the issues involved in your selection of the industry group that you conclude is most likely to prosper in the coming months and your justification of your choice of that industry.

Team Analysis of Select Industry Groups

This analysis is a team assignment that requires your team to analyze a select group of alternative industries to determine which is most likely to perform best in terms of growth and earnings over the next 12 months. Your instructor will create your teams, ideally based on similar views about the near-term prospects for the U.S. economy expressed in the Individual Asset Allocation Exercise.

To guide this second stage analysis, you are asked to rely on the North American Industry Groups database available at Yahoo! Finance. The system is comprised of 9 macroeconomic sectors, 31 business segments and 215 industry groups. This database is readily accessible via Yahoo! Finance at

http://biz.yahoo.com/ic/ind_index.html

To simplify the exercise the 215 industry groups within the database have been reduced to a more analytically manageable 24 industry groups (each with public firms listed at Yahoo! Finance totaling no less than 5 and no more than 15 companies) in 7 macroeconomic sectors as follows:

Basic Materials

Aluminum

Major Integrated Oil &Gas

Nonmetallic Mineral Mining

Consumer Goods

Appliances

Confectioners

Office Supplies

Financial

REIT-Healthcare Facilities

REIT-Hotel/Motel

REIT-Industrial

Healthcare

Drugs-Generic

Home Health Care

Hospitals

Industrial Goods

Manufactured Housing

Pollution & Treatment Controls

Services

Advertising Agencies

Air Delivery & Freight Services

Drug Stores

Electronic Stores

Home Improvement Stores

Jewelry Stores

Technology

Computer Based Systems

Long Distance Carriers

Personal Computers

Utilities

Water Utilities

To access more details on these groups go to http://biz.yahoo.com/ic/ind_index.html and click on any of the names of the 24 groups to go to each industrys Industry Center page. Additional useful information is available via the link to Industry Browser on the left. Also, on each industrys summary page click on Company Index and then on Public on the subsequent page next to View: to get the list of public companies in this industry. Our focus is on publicly listed companies in which we might ultimately invest. The list of public companies is provided alphabetically. Following each name is the companys ticker symbol in brackets. See http://www.investopedia.com/terms/s/stocksymbol.asp or http://www.investorwords.com/4968/ticker_symbol.html for brief definitions of stock/ticker symbols.

Please note that on occasion the ticker symbol may also be followed by other letters, such as PK or OB (see http://www.investopedia.com/ask/answers/04/022004.asp or http://www.investopedia.com/ask/answers/120.asp for explanations). It is recommended that we ignore stocks so designated in these exercises.