You will be responsible for employing the three disciplines we learned in picking a stock to arrive at your one stock buy recommendation. You will use the following three steps:
- For the Quantitative Analysis, use FINVIZ (or some other screening software) screening software to screen for stocks based on some criteria that make economic and/or investment sense (e.g. screen for stocks that are attractively valued (low P/E, P/S), have strong growth rates and are viewed positively by analysts (positive earnings surprise and positive earning revisions). You should have between five and ten stocks resulting from your screen. You may have to adjust your screening parameters to reduce the number of stocks to less than ten.
- For the Fundamental Analysis, compare the stocks from your screen on the following basis:
- For the Technical Analysis, analyze these remaining three stocks on the following factors:
- Historical (profits, operating efficiency and growth)
- Expectational (EPS estimate change, recommendation change and surprise)
- Valuation (P/E, P/Sales, PEG)
This framework is the one we used for the Fundamental Analysis project. Choose the best three stocks from this analysis.
- Bollinger Bands
Use a technical analysis software (i.e. StockWorm.com, BigCharts.com, JavaCharts.com, StockChart.com) to analyze the stocks. Choose the best stock from the three that offers the best short term, technical analysis. This will be the stock you will recommend to your portfolio manager to buy.
You will hand-in a three page, type written paper that summarizes each section of the analysis above. You can have other attachments for your charts. For the quantitative analysis, list the factors you used for the screen and why you used them. For the fundamental analysis, explain the choice of the top three stocks either in bullets, a matrix or several short paragraphs or combination of these three. For the technical analysis, explain your choice for top stock again using bullets, a matrix and/or several short paragraphs.