Assignment

You are a financial analyst for a large investment advisory firm. You have been asked to research three companies in the Oil and Gas Industry. The three companies are Marathon Petroleum Corporation (MPC), Phillips 66 (PSX) and Valero Energy Corporation (VCO). These companies refine petroleum and sell gasoline. And they also operate in other petroleum-related markets. The end product of your research is a recommendation (and related justification) about which company's (1) bonds and (2) common stock your firm should recommend to clients.

Be sure to include in your analysis any debt-related ratios and equity-related ratios which you deem critical. And be sure to look at trends. You may also refer to information published on various reputable internet sites. And you might also look for various pieces of information found on the companies' websites, such as press releases and SEC filings.

Your report might include your recommendations and related analyses in one section, with supporting documentation in a second section. And please make your report easy for a reader (me in this case) to understand. Believe me, one of the best ways to "look good" in your jobs after grad school to is make it easy for readers to understand what you recommend and why.

I provided you with the assignment last week. As for the length of you report, it should be typed double-space, and I feel it should be at least six full pages in Section 1. Remember that you have to analyze three companies, the stock AND debt of which you will recommend or not recommend You need to incorporate a lot of what you have learned in our class:

- by analyzing the creditworthiness of the three companies, using various ratios and looking for rating agency reviews and other information that would help you determine the best company when looking at each company's borrower risk and effective interest rates;

- by analyzing the opportunity for reasonably predictable stock price and dividend increases, using various equity-related ratios and trends.

As I stated last week, your report should include your recommendations and related rationale in one section, which I think might take six type-written pages or more, with your support in the second section. Your support might include ratio calculations, copies of the companies income statements, balance sheets and cash flow statements, any published security analysts' reports, and other information (most likely from internet searches and SEC filings).

My estimate of six pages or more for Section 1 is based upon a debt review and an equity review for each of three companies, with investment recommendations.