I. Executive Summary. Provide a brief overview of the key findings and recommendations from your portfolio analysis and research.
II. Portfolio Analysis. Research and analyze a portfolio of at least five securities using a portfolio strategy (value, growth, etc.) and risk-tolerance level
appropriate to the needs and return requirements of the client. For each security in the portfolio, you should provide a financial analysis covering the
associated risk, return, and tax implications. In addition, you should provide a clear assessment of the strengths, weaknesses, opportunities, and threats
of any companies whose stock is included in the portfolio. You should also assess the alpha, beta, and intrinsic value for each equity security and for the
portfolio as a whole based on your analysis. Use the capital asset pricing model (CAPM) to develop the return for each equity security. Be sure to provide
a well-supported rationale for why each security is included and how it aligns with client objectives, including an assessment of any preferential factors
the client might be concerned about such as market share, innovation, and sustainability practices.
III. Competitive Analysis. Research at least one publicly traded, United States–based global company in more depth, comparing its performance and value
with a close competitor. (If your portfolio includes more than one company that meets these specifications, select the one you think would be of most
interest to the client.) The goal is to analyze investment alternatives with an eye to better serving the client. The competitive analysis must include, but
is not limited to, the elements described below.
– Compare key ratios of financial performance and health at the selected company and its peer competitor. Be sure to consider, at a minimum,
the following measures: o Profitability, including return on equity (ROE) and net profit margin
o Liquidity, including the current ratio
o Debt management, including the debt-to-equity ratio
o Market, including earnings per share and price earnings ratio
– Analyze what the key ratios for the two companies suggest about their respective organizational goals and objectives both now and in the
future.
– Compare newsworthy events (such as salient industry or economic events, policy or political changes, and natural disasters) that have affected
(or may affect) one or both companies. Be sure to discuss how the events affected (or are likely to affect) strategic goals and financial planning
within the two organizations and how that, in turn, may affect investor returns.
– Evaluate the alpha and beta for each company’s stock.
– Assess the merit of the selected company as an investment in the global context as compared to the peer company selected. In other words,
which company is a better investment for the client and why?
IV. Estimated Return and Value. Estimate the rate of return for the portfolio as a whole and perform a multi-period net present value analysis based on the
client’s investment time horizon. Be sure to discuss the expected rate of inflation.
V. Conclusions. Specify any takeaway message for the client based on your research and the securities’ observed performance. Do you stand by your initial
selections? Why or why not? Be transparent about any assumptions you have made, how confident you are in those assumptions, how changes in those
assumptions might affect portfolio performance, as well as when it might be appropriate to review the portfolio again to make adjustments as needed.
