Question

When looking at the macro economy right now, the Federal Reserve System seems to be taking the position that a recession is unlikely at least for the next year. Given the seven companies listed in the first assignment (i.e., AAPL, ADP, AMZN, GOOGL, JPM, MCD, and WEN), list three firms most likely to benefit from an upturn in economic activity. Please provide a short justification for each firm you select.

Answer 1

Three firms that will benefit the most from the upturn in the economic activity are – Apple (AAPL), Amazon (AMZN) and JPMorgan Chase (JPM).

Apple will stand to gain as many products of the company constitute a part of its target buyers’ discretionary purchase. With the growth becoming tangible in the economy the disposal income of people will rise and this will directly benefit Apple. Secondly companies will buy more number of laptops and other devices being used by them and Apple’s revenue will see a robust traction.

The same logic applies to Amazon as well. With the rise in disposable income more number of people will increase their buying at the e-commerce site and new buyers will also join in. The average purchase size at the website will certainly increase. AWS or Amazon Web Service will also see visible tangibility due to higher spending by companies.

Lastly JPMorgan Chase will stand to gain from an upturn in the economy. With improved economy the company will see increased momentum across all its verticals like asset management, investment banking, treasury services etc. Companies will be pursuing M&A (mergers and acquisitions) opportunities, wealthy clients will start looking at wealth management services etc. All this will augur well for JPMorgan Chase in terms of its business prospects.