Final Stock Picks Analysis Paper 1

Final Stock Pick Analysis Paper

Holly Davis

Central Piedmont Community College

Patrick Sahd

BUS 110-85

Final Stock Picks Analysis Paper 2

At the beginning of the semester for my Introduction to business course our instructor

gave use the assignment of investing a hypothetical $25,000 into three different companies of

our choosing. I then had to monitor their progress in the stock market over an 8-week timeline

and write a series of papers on the data. The tree companies I chose were, General Motors

Company, United Parcel Service and Apple Inc. For my final paper I will analyze my final gain

or loss.

My first stock pick was General Motors Company (GM). I bought 130 shares of stock for

$30.52 per share. I chose GM because I have always owned a GM and I have a lot of faith in the

company. If you visit the General Motors website their mission statement reads, “General

Motors is a global automotive company united by a single purpose to earn customers for life”

(2016). I believe this to be a true statement; GM has strived to make a major comeback since

they filed for bankruptcy in 2009. General Motors makes GMC, Chevrolet, Pontiac, Buick,

Cadillac, Saturn, Saab and Hummer lines of automobiles. The company operates through GM

North America, GM Europe, GM International Operations, GM South America, and GM

Financial segments (The Street, 2016). Due to the drop in sales and GM’s desperation while

approaching bankruptcy they decided to discontinue their Pontiac line of in 2010. According to

an article released by auto observer in 2009, General Motor’s decision to eliminate the Pontiac

line was, “an intensely personal one” (Krebs, 2009). It was a sad year for me also; my favorite

car of all time is the Pontiac Firebird. A year earlier, in 2009, GM decided to discontinue their

line of Saab, Saturn and Hummer’s (Krebs, 2009). In October of 2009, after GM announced

they would not make Hummer anymore, they sold the brand to a Chinese dealer (npr, 2009).

Final Stock Picks Analysis Paper 3

Since the announcement of chapter 11 bankruptcy, GM has worked to rebuild its company and

name.

General Motors Company offers a full line of cars, trucks, vans, SUVs/crossovers, and

police models for Buick, GMC, and Chevrolet. Inside the automobiles they are striving for more

luxury. GM fleet online gives you a full list of consumer options such as, OnStar with 4G LTE,

satellite radio, heated seats, automatic crash response system, rear park assist and more (2016).

Yahoo Finance names General Motors top competitors as Ford Motor Co. (2016). Ford

manufactures and sells cars, trucks, SUVs, vans and is ranked one of the top in the nation. Ford

is also a leading car dealer in China, where Lincoln is one of the most popular automobiles. In an

article released by Bloomberg news, China is said to replace the U.S as Lincoln’s top

manufacturer. If Ford is able to manufacture Lincolns in China, instead of the U.S it could save

them 25% on import tax (2016). According to an article by The Street, General Motors was rated

a pre-market lead candidate by Trade-Ideas LLC (2016). This was based on their average dollar

volume $444.8 million; GM trading 94,081 shares in pre-market hours on July 8th, 2016, and up

from 2.3% from July 7th close. The Street also ranks GM as a “Buy” due to, “the company's

strengths in multiple areas, such as it compelling growth in net income, revenue growth, and

notable return on equity, attractive valuation levels and impressive record of earnings per share

growth” (2016).

The graph inserted shows GM stock prices over a 2-year span. In March of 2015 GM

stock sold at $38 per share, the highest it has seen since July, 2014 and December of 2013 when

shares reached peaks of $40. Since March 2015 GM shares have decreased as low as $26 per

Final Stock Picks Analysis Paper 4

share seen in Feb, 2016 and have steadily increased to $29 per share and stayed since July, 2016.

The second graft inserted shows CNN Money’s forecast of GM stock over the next 12-months.

“The 17 analysts offering a 12- month rating” for GM stock price give them a high of $50 per

share, median at $36 and low of $29 per share (CNN Money, 2016). The third graph inserted is

my 8-week stock market progress in GM. Looking ahead twelve months I think it is safe to say if

you have stock purchased in GM keep it and if you are looking to purchase stock in GM now is

the time to do so. By this time next year you could expect anywhere from $11 increase to a $ 21

increase on your share purchase. If I had a choice to choose General Motors or another company

I would choose GM again.

General Motors Corporation Stock Chart courtesy of Yahoo Finance (GM. 2016)

Final Stock Picks Analysis Paper 5

General Motors Corporation Stock Forecast courtesy of CNN Money (GM, 2016)

Name of Company General Motors CompanyTicker Symbol GMShares Purchased 1505/20/16 Price Per Share

$30.52

Date Read Closing Value of Shares5/23/2016 $ 30.6 $4,588.505/30/2016 $ 31.4 $4,708.506/6/2016 $ 30.0 $4,504.50

6/13/2016 $ 29.1 $4,362.006/20/2016 $ 29.7 $4,447.506/27/2016 $ 27.5 $4,126.507/4/2016 $ 28.9 $4,333.50

7/11/2016 $ 30.1 $4,519.50

General Motors Company Stock Market Progress Spreadsheet (GM, 2016)

Final Stock Picks Analysis Paper 6

The second stock I chose to invest in was United Parcel Service (UPS). I bought 100

shares at $101.63 per share. I chose to invest in UPS because my dad worked for UPS for almost

30 years and I believe in the company, what they stand for and how they treat their employees.

UPS was founded in 1907 in Seattle, Washington under the name “American Messenger

Company” by an 18-year old Claude Ryan and 19-year old James E. (Jim) Casey. Today, UPS is

the world's largest package delivery company and a leading global provider of specialized

transportation and logistics services (UPS, 2016). UPS has a net income of $3 billion and offers a

variety of helpful tools to the everyday shipper ranging from, express envelops, express packs,

boxes and tubs, shipping labels, forms. UPS also has a chain of stores called, “The UPS Store”

inside employees’ help customers label, wrap, and weigh packages. UPS then expedites the items

you want to send globally for you (UPS, 2016).

The biggest competitor to UPS is FedEx Corporation (FDX). FedEx is also a global

shipping company with a net income over about $2 billion. FedEx delivers packages, envelops,

offers same day shipping, and lets customers choose what day and time they want their packaged

to be delivered and have a chain of stores called “FedEx Office”. Inside these stores you meet

with workers from FedEx who are trained to help you with boxing, labeling and shipping your

items globally. An article released by, The Motley Fool states, FedEx e-commerce business

remains strong and they continue to invest in order to generate growth. UPS can do the same

(2016). Merriam-Webster dictionary defines e-commerce as, the commercial transactions

conducted electronically over the internet. Over the next several years FedEx’s capex will range

between 9-10% that is over the “sweet spot” of the company. This is due to FedEx investing

more into the company than the revenue they are receiving quarterly (Samaha, 2016). FedEx

Final Stock Picks Analysis Paper 7

wants to expand their global business. “In contrast, UPS is expecting capex as a share of revenue

to be in the 4.5% to 5% range in the next few years. UPS does not see the need to increase their

capex spending over there initial budget, possibly because they already have such a strong grip

on global shipping. Given the increasing pressure on FedEx to expand capacity to deal with e-

commerce growth, will UPS be forced to rise its spending above that range? It's something to

look out for” (Samaha, 2016).

The first graph inserted shows UPS stock prices over the past 2-years. UPS stock

hit peaks of $114 per share in January of 2015, decreased to $98-$ 102 per share over the next 6

months and bottomed out at $88 per share just 7-months ago in January of 2016. Since January

2016 UPS stock has increased and is now at $109 per share, only $6 away from its peak high in

January of 2015. The second graph inserted from The Street and shows their reason for choosing

UPS as a big-cap potential outbreak (2016). Jonas Elmerraji explains his reason for choosing

UPS as a big-cap outbreak. He writes, they are up 10% since January of this year “and now an

atypical price pattern is signaling a potential up-move if UPS can continue its charge through

$106 this week” (2016). Elmerraji goes on to write, the potential for “Buy” is seen in the

“breakout above the patterns neckline”. Shares peeked above $106 by the close on June 29th,

2016. If shares can make their way above the June 30th high of $107, consider it a confirmed buy

signal (Elmerraji, 2016). The third graph inserted shows CNN Money’s year forecast for UPS

stock. In a 12-month range they forecast UPS highs at $126 per share a 15% increase, their

median at $110 a 0.4% increase with the low at $90, a 17% decrease from stock prices today

(2016). For my final graph I inserted my 8-week spreadsheet tracking my stock market purchase.

Over the course of 8-weeks my purchase increased each week, and I came out of the 8-weeks

Final Stock Picks Analysis Paper 8

with a profit of $864. Considering all the evidence I would chose to keep my investment in UPS.

There is a potential to lose money in the next 12-months however, the potential to make money

is greater. For me UPS is a definite buy.

United Parcel Service Stock Chart courtesy of Yahoo Finance (UPS, 2016)

United Parcel Service Stock Progress Chart courtesy of The Street (UPS, 2016)

Final Stock Picks Analysis Paper 9

United Parcel Service Stock Forecast courtesy of CNN Money (UPS, 2016)

United Parcel Service, Inc.UPS100

$101.63

Closing Value of Shares $ 101.4 $10,137.00 $ 103.0 $10,298.00 $ 103.1 $10,311.00 $ 103.6 $10,364.00 $ 106.1 $10,610.00 $ 103.8 $10,377.00 $ 108.4 $10,836.00 $ 110.0 $11,001.00

United Parcel Service Stock Market Progress Spreadsheet (UPS, 2016)

Final Stock Picks Analysis Paper 10

The last stock I chose to invest in was Apple Inc. (APPL). I chose Apple because of my

“risky” first two choices. We live in the age where everything is moved by technology, so

investing in a technological company seemed like a “smart” move. I bought 100 shares at $94.64

per share. “Apple Computers, Inc. was founded on April 1, 1976, by college dropouts Steve Jobs

and Steve Wozniak, who brought to the new company a vision of changing the way people,

viewed computers. Jobs and Wozniak wanted to make computers small enough for people to

have them in their homes or offices. Simply put, they wanted a computer that was user-friendly”

(Terrell, 2008). Apple Inc. is known for its software, fit bits, iPad and iPhone. Apple leads the

way for consumers looking for new software updates such as, IOS 8, 9 and now IOS 10, where

iPhone users can get the latest and greatest software. However, the newly release IOS 10 does

not have all the software kinks removed yet. Consumers can choose to update their iPhone and

IPad with this new system, but in return may be living on the “digital Edge” and may want to

covert back to an older software system (Murphy, 2016). Waiting on the IOS 10 software release

date in fall is wise for consumers, writes Murphy by fall the “bugs” should be worked out

(2016).

Microsoft Corporation (MSFT) is the biggest competitor to Apple Inc. Microsoft is also

one of the largest technology dealers in the world. They are known for their laptops, computers,

game consoles, cellphone and software. Microsoft just released the free Windows 10 upgrade

and it has some significant differences between the old Windows 7 & 8. For example, Windows

10 will no longer have Windows Media Player and DVD support, you can no longer choose

when to

Final Stock Pick Analysis Paper 11

update your device Windows 10 will automatically update whether you like it or not. The biggest

concern surrounding Windows 10 is the privacy factor. Windows 10 will be able to utilize

Cortana when using the search bar, sending all your queries to Microsoft servers. “Your

Windows Store app usage is tracked for ad targeting. Windows 10 tracks your typing, location,

Edge browser behavior, program installations and more” (Chacos, 2016). Between Microsoft’s

latest windows 10 upgrade and the reviews from analyst on Apple’s new iPhone 7 being released

soon. It’s no wonder why neither company has skyrocketing stock prices.

The first graph inserted shower Apple Inc. stock over the past two years. Apple stock

prices are the same price they were two years ago. The stock did increase some, hitting highs of

$128 between February and July 2015. Since July 2015 Apple stock has fallen back to below

$100 per share and sits today at $96 per share. This could be the outcome of the “year-over-year”

release of the latest iPhone with and Apple posting the decline of iPhone sales (Munarriz, 2016).

The second graph inserted shows CNN Money’s forecast for Apple stock for the next year. They

are giving Apple a high share price of $185, a 91% increase, with a median of $120, a 24%

increase and a low of $66, a 32% decrease. The Street rates Apple as a “buy” (2016). This rating

has held steady since the beginning of July. The final graph inserted is my 8-week spreadsheet

tracking my Apple investment. At the end of the 8-week period I have made $39. In my opinion

investing in Apple could be a very risky move, it seems safe because of the technological world

we live in, but with any investment there is always a risk. With the “current consensus amongst

polled investment” analyst agreeing that Apple is a good investment I would keep my stock pick,

hold out for a year and hopefully sell when the stock prices increase (CNN Money, 2016).

Final Stock Picks Analysis Paper 12

Apple Inc. Stock Chart courtesy of Yahoo Finance (AAPL, 2016)

Apple Inc. Stock Market Forecast courtesy of CNN Money (AAPL, 2016)

Final Stok Picks Analysis Paper 13

Apple Inc.AAPL

100$94.64

Closing Value of Shares $ 96.6 $9,659.00 $ 99.9 $9,986.00 $ 98.6 $9,860.00 $ 97.3 $9,734.00 $ 95.1 $9,510.00 $ 92.0 $9,204.00 $ 95.9 $9,589.00 $ 97.0 $9,698.00

Apple Inc. Stock Market Progress Spreadsheet (AAPL, 2016)

At the beginning of my 8-week timeline my only objective was to come out with a profit.

I chose to invest in General Motors, United Parcel Service and Apple Inc. With the hopes my

“safe” Apple investment would outweigh my “risky” GM investment. I was pleasantly surprised

when at the end of the 8-week period I walked away with a profit of $1,013.50.

Final Stock Picks Analysis Paper 14

$24,205.00Name of Company

Ticker Symbol

Shares Purchased

5/20/16 Price Per Share

Date Read Closing Value of Shares Closing Value of Shares Closing Value of Shares Total Value $$ Change

5/23/2016 30.6$ $4,588.50 101.4$ $10,137.00 96.6$ $9,659.00 24,385$ 179.50$

5/30/2016 31.4$ $4,708.50 103.0$ $10,298.00 99.9$ $9,986.00 24,993$ 787.50$

6/6/2016 30.0$ $4,504.50 103.1$ $10,311.00 98.6$ $9,860.00 24,676$ 470.50$

6/13/2016 29.1$ $4,362.00 103.6$ $10,364.00 97.3$ $9,734.00 24,460$ 255.00$

6/20/2016 29.7$ $4,447.50 106.1$ $10,610.00 95.1$ $9,510.00 24,568$ 362.50$

6/27/2016 27.5$ $4,126.50 103.8$ $10,377.00 92.0$ $9,204.00 23,708$ (497.50)$

7/4/2016 28.9$ $4,333.50 108.4$ $10,836.00 95.9$ $9,589.00 24,759$ 553.50$

7/11/2016 30.1$ $4,519.50 110.0$ $11,001.00 97.0$ $9,698.00 25,219$ 1,013.50$

#1 #2 #3

Business 110 Stock Market Game - Section 85

General Motors Company United Parcel Service, Apple Inc.

$30.52 $101.63 $94.64

GM UPS AAPL150 100 100

Stock Market Game Spreadsheet (GM, UPS, AAPL, 2016)

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