Investments and Portfolio Management

Investments and Portfolio Management
Spring 2020
Investment Proposal
Towards the final grade for this course, each student will submit an investment proposal for their
assigned company. The goal of the project is to use concepts of fundamental analysis and stock
valuation to assess whether to invest in the company’s common stock at this time. You may also
use technical analysis to support your recommendation. The report should not be more than 10
pages long double spaced, excluding graphs, figures, table of contents, references etc. The project
accounts for 20% of your final grade and is due by May 5th, 2020.
Your report should cover three main aspects: (a) state of the U.S. economy over the past one year
and outlook for the economy in the current year, (b) state of the primary industry in which the
company operates – last year and current year (c) the firm’s financial performance over the last
three years as well as projections for the coming year. You may choose to use a top-down approach
or a bottom-up approach as your address these three aspects in your proposal.
(a) State of the economy (20 points):
Choose 3 to 5 macroeconomic variables that you think are relevant for your project and
use those to discuss the state of the U.S. economy in 2019 as well as to examine the state
of the economy through end of 2020. This section will be scored based on the relevance
and importance of the economic indicators chosen and the quality of analysis and
discussion of the indicators.
(b) State of the industry (20 points)
Collect data on financial ratios for the primary NAICS industry in which the firm operates
and use these to analyze the state of the industry in 2019, as well as important trends in this
industry that you think are relevant for your project. Also analyze and discuss your
projections for this industry till the end of 2020 using the same financial ratios. Scores will
be awarded based on your choice of financial ratios, your analysis of these ratios, and the
quality and relevance of your discussion of the industry to your overall recommendation
about the firm.
(c) Analysis of the firm (30 points)
Collect the same financial ratios as in (b) for the past three years for your firm. Compare
the ratios to discuss how the firm has been doing year-on-year (include trend analysis),
how you think these ratios will change by end of 2020 and why. Also compare the firm’s
ratios to the industry ratios in (b) for 2018 and 2019 and how these are relevant for your
recommendation about investment in the firm’s common stock. Conclude with your
recommendation on whether to invest in the company’s common stock this year. Scores
will be awarded based on the choice of financial ratios, quality of discussion and trend
analysis, and overall interpretation of the data presented in your report.
The remaining 30 points will be for overall quality of report writing and content (10 points),
presentation (10 points; includes cover page, table of contents, the organization of sections, graphs,
headings etc.), and the quality and integrity of the references section (10 points). Please note that
the recommendations should ultimately be your own. If your report simply copies
recommendations and analyses from analyst reports available online and presents it
differently, you won’t get many points.

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