Question

A client, Manuel Rodriguez, has just inherited some money and has decided to invest it in stock. He is not interested in mutual funds because he prefers to have personal control over his stock investments. He currently has a diversified portfolio of stock to which this new investment will be added. Your client wants to invest about $500,000, but in keeping with his conservative investing strategy, he wishes to keep his risk as low as possible.

Mr. Rodriguez has asked you to evaluate the most recent annual reports of several corporations as possible investment options. Choose three corporations whose stock is listed on the NYSE or the NASDAQ and whose annual reports you can study. Compare the information found in these reports and then write a report for Mr. Rodriguez that explains which of the companies is likely to be his best investment. Explain your conclusions thoroughly, quoting from the annual reports as necessary.

Choose any stocks.

Answer 1

A. Tesla- this company is an electronic carmaker and this is expected that there will be a huge shift from normal car making to the electronic car making and this company will have the majority of the market share and this will also have the majority of the pricing power in its own hands so this company has a very high potential of returning a higher rate of return to the investor as the founder of the company is also visionary and it can be seen that the company is focusing upon reduction of its debt as it can visible on the annual report.

B. Netflix- I will also advise him to invest in Netflix as this is company which is providing with the digital streaming services and there is an expectation that in the future, the concept of cinema halls and theatres are going to to evaporate, so there will be online viewership of movies and this company is going to acquire the largest possible market share available because this is the largest possible player in the segment and it has a potential of very high upside.

C. Amazon- this company is one of the largest company present in the world but it still has the potential to growth because it has a very aggressive leadership and a very visionary balance sheet which can be seen that this company is trying to take more debt and they have a very high control over their prices at they are able to generate growth out of the debt capital so it can be said that one can invest in this company for the longer period of time .