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finance
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The following is an example of a students work, from last semester, on the Stock Analyst Paper. This student did receive an A for their efforts In the following document you will see stock recommendations for five companies. Company Name: Microsoft Exchange: NASDAQ Symbol: MSFT Recommendation: BUY Analyst: Student Name Here About the Company: “Microsoft Corporation develops, manufactures, licenses and supports a wide range of software products for a multitude of computing devices. The Company's software products include scalable operating systems for servers, personal computers (PCs) and intelligent devices; server applications for client/server environments; information worker productivity applications; business solutions applications, and software development tools.” (Yahoo Finance) Current News: Microsoft has said that there are new security flaws that would allow a malicious user to take control of the computer using Java code. Also a Goldman Sachs analyst has said that the video game sector is slowing down. “November sales of $712.5 million came in worse than expected at 7.3% year-over-year growth, well shy of his expectation for 20% to 25% growth.” (Yahoo Finance) Fundamental Analysis: The book value is about 20% of the stock price which is acceptable. Microsoft’s P/E is 33.06 compared to 35.64 for the industry and 38.36 for the sector. This shows that MS is a bargain compared to the industry and sector. The following numbers are what really make Microsoft a good buy. Net Profit Margin is 30.92% while the industry and sector is lagging behind with 20.97% for the industry and 7.95% for the sector. The return on Equity also caught my eye as it’s much higher than the industry and sector ROE MS = 17.83% Industry = 15.30% and Sector = 10.19. The final point that makes Microsoft stock a good buy is their Debt to Equity is 0 which is rare in a technology company. Even though Microsoft is one of the biggest companies in the world their stock is undervalued compared to the sector making this a good buy at this time. Technical Analysis: Microsoft’s Beta is 1.71 which is a little on the high side but it’s below the industry and sector. The industry carries a beta of 1.85 while the sector is 1.86. This beta adds a little more risk but it’s less than the sector/industry. The short interest of float which is at 1.3% show that not many people believe that this stock will decline in value. Finally the stock price is closer to the 52 week low then its high meaning it should rise. 52 Week Low 41.41 52 Week High 70.62 Market Price 50.80 Overall: I feel that MS is a good investment for now as well as for the future. They will continue to develop new products and improve their finances. The only negative that caused me to downgrade from a strong buy to a buy was the fact that the insider trading shows many MS employees selling off their shares which concerns me.
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