Assignment: Stock Report Minimum Requirements
Pick a stock and email me to confirm no one else has chosen it.
When choosing your stock it must be i. public firm, ii. Canadian, iii. Stock price greater than $5 per share at the time you chose it, iv. Found on sedar website with financials from 2006 and 2011 or instead 2007 and 2012 (annuals) as you need to cut and paste the balance sheets and income statements for one of the above pairs (years).
Your report will be comprised of the following:
1. Description of firm which includes a. what it does (products, services), b. where it does it (countries where it produces and sells), c. who it sells to (clients), d. competitors, any substitute products/services, technological/market changes, i.e. how the business environment may change.
2. Business Cycle (economic) analysis and Stock Market stage (bull or bear) forecast. Please find 2 brief economic forecasts and 2 stock market stage outlook forecasts. Read (and cite) them and then you make a judgment and give a 1 year (2013) forecast on the economy and stock market and how it may impact your firm (if your firm has a peculiar sensitivity to the forecasts).
3. Technical Analysis; for each of the last 5 years (you need 6 years of data to have a 5 year time period) calculate the P/E, P/CF, P/S, and P/B ratios as well as report the high and low stock price for the most recent 12 months.
4. Fundamental Analysis; conduct company analysis by at least calculating common size (100%) statements (balance sheet and income statement) for the 5 year time span (2006-2011 or instead 2007-2012) using the statements you find on sedar website Also, please cut and paste the $ financial statements into your stock report. You are welcome to do additional company analysis, e.g. each year for the 5 year or longer time span, financial ratios, considering management forecasts, et cetera.
5. Valuation; details on how to compute the following will be discussed in class. Please calculate a current stock value using either i. Constant dividend growth model, or ii. 2-stage dividend growth model. You may need to impute a dividend at some time point for your stock if it does not pay a current dividend and there is no indication when it will begin (or resume) paying a dividend.
6. Recommendation; Buy or Sell or Hold accompanied by your stock price estimate (value) which has the range of +/- 10%, e.g. $40 per share implies your stock price valuation range is from $36 to $44.