This is a stock-pitching project. The point of the project is for you to take on the job of a financial analyst and make recommendations of stocks to buy.

Stocks You will pick one stock to recommend. The first question youre probably asking is How do we decide what stocks to pitch? The answer to this is: there is no wrong answer. You can literally pick any company that is publically traded on any exchange in the world, as long as you can find it on Yahoo Finance. Of course you should not just pick a company at random.The point of this project is to learn to make informed decisions about what to buy. You will be graded on the quality of the research that leads you to this choice.

Research:

In order to recommend a stock you will need to perform extensive research on it with the goal of deciding why you think the value of the company will rise in the future. All your research should consider a one-year investment horizon. What do you think will happen to the stock over the course of one year, starting from now?The main question you should investigate is why should the price increase. Stock prices increase if a company is doing better than in the past or is expected to do better. For example, is your company coming out with a new product that will tap into a previously undeveloped market and increase revenue? Is your companys main competitor leaving the market? Is your company opening a new location in a new demographic? Is one of your companys supply chain partners offering a new product that will lower costs? Has your company hired a new CEO that has a proven track record? Has your company renegotiated employee health care plans and lowered expenses? These are just a few of the types of questions you should ask when you are considering to buy stock in a company.

There are many sources you can consider for your research. The first place to start is with fundamental information, including the income statement, balance sheet, and cash flow. For example, all companies that are traded on US exchanges are require to file 10-K reports with the Securities and Exchange Commission (SEC) annually. The 10-K report is meant to be a detailed summary of the companys financial performance. The 10-K includes a summary of the companys business, risk factors, legal proceedings, financial data, market risk, and management discussion and analysis (MD&A). Perhaps one of the most important parts of a 10-K from the perspective of an investor is the MD&A. This section provides a clear insight into the company from the people who know it best. In addition to annual regulatory filings many stock exchanges require a quarterly report as well. These quarterly reports are intended for stockholders and also provide useful information for making a recommendation. Besides filings from the companies themselves, many financial institutions employ research analysts who publish reports on other firms. Sometimes these reports are kept private and sometimes they are made public. If you can find them, analyst reports are good sources of outside perspective.

The above sources of research material are all qualitative and based on subjective analysis. One of the best sources for quantitative information is found in historical prices. You can look to see what has happened to your stocks prices over the last hour, day, week, month, year and even decade from Yahoo Finance. You can even look at price changes around major product releases or quarterly reports. Besides historical prices there are some key market statistics that can be very informative for stock research. Some of these key statistics are Earnings per Share, Price to Book Ratio, Revenue, EBITDA and Price to Earnings Ratio. Some of these statistics are related to the concept of value and growth stocks and the Fama French model. If you dont know what these are I would recommend looking them up online. You should include in your report if your pitched stock is a value or a growth stock. You should also report if its a high cap or low cap stock. There are many other statistics used for stock analysis and if you find another one you like you can certainly include it in your report as well.

As you can see there is not just one source of information for research. In fact, the sources Ive listed are just a few, if you can find another source, thats great.

Report

The ultimate goal of this project is to make a stock pitch. You will have to write a report about why you think an investor should buy your recommended stock. Your report should look professional including some discussion of why youre making your recommendation along with supporting data. You should include some graphs and tables for supporting information. At the end of your report you need to make a final decision: what do you think the stock price will be in one year?

Grade breakdown:

40%: Qualitative analysis using financial information such as income statement, balance sheet, cash flow, etc. 40%: Quantitative analysis using historical data. 20%: Presentation of qualitative and quantitative analyses clearly; tables and graphs are very helpful.

For a thoroughly analyzed report, its minimal length is 4 pages of A4 size with 12 font size and single line spacing. Depth and broadness of the analysis are two major factors that decide the projects grade.