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FINA 3303
Spring 2018
Random Portfolio
Due Thursday January 18
NOTE: There is a penalty of one letter grade for each day the project is late!
Portfolio Selection: Random (Naïve) Diversification
Choose five (5) common stocks using a random method of your choice. The stocks must be selected from the NYSE/AMEX or NASDAQ exchanges. The method for making a random selection is up to you, however, you must describe your method in sufficient detail that I can replicate it. Note: Do not include ETFs, preferred stock, bonds, rights, or warrants. Also avoid stocks that are in bankruptcy proceedings.
For each stock
, first
, flip a coin to determine the exchange,
second
, use your random process to determine 1 to 5 letters for the quote search in Yahoo! Finance or website of your choice.
While you aren’t using information to select the stocks, get to know the companies you selected (and help me learn about them as well) by gathering information about them. In an appendix, please
. You may provide additional information if you like, but for consistency (which makes my life easier) you must follow the instructions above first.
Submit your portfolio, in class and in Turnitin, on the due date. Your report should include:
1. A cover page including 1) a thorough justification for why anyone would (rationally) randomly choose stocks for their long-term portfolio (theory and rationale please). Yes, there is a rational explanation (refer to Chapter 11 if you need help), and 2) a description of the method you used to select the stocks in your portfolio. Make sure you describe the method of random selection in a manner that enables the reader (me) to replicate what you did.
2. The second page should contain a table consolidating information on all five stocks. The table should list the company’s name, ticker symbol, sector and industry, principle competitor, ranked by sales, and closing price on the date chosen. It should also list the median price target estimate by analysts, TTM EPS (earnings per share, trailing twelve months), annual forward (or forecasted) earnings per share estimates, forward P/E, Beta, market capitalization and PEG ratio.
NOTE: Use the template posted on Blackboard for your table.
I WILL NOT GRADE PAPERS WITH CUSTOM DESIGNED TABLES.
FOR CONSISTENCY, AND FOR THE PURPOSE OF EVALUATION AT THE END OF THE SEMESTER, AVOID STOCKS FOR WHICH ALL REQUIRED INFORMATION IS NOT AVAILABLE (NA)!
Note that stocks which do not include dividends are acceptable, though the dividend may be listed as NA.
3. Document APPENDIX. Print the Summary and Profile pages from Yahoo! Finance for each stock.
Sheet1
| Random Portfolio (example) | |||||||||||||||||||||||||||||||||||||||||||||
| Jodi’s Cupcakes, Inc | Bil’s Auto Parts, Inc. | Lumbering Jack’s Sports, Inc. | Idiot Corp | Mindful Wellness Centers, Inc. | |||||||||||||||||||||||||||||||||||||||||
| Ticker | JOCC | BAPI | LJS | IDIOT | MWC | ||||||||||||||||||||||||||||||||||||||||
| Exchange | NASDAQ | NYSE | |||||||||||||||||||||||||||||||||||||||||||
| Sector | Consumer Discretionary | Industrial | Technology | Healthcare | |||||||||||||||||||||||||||||||||||||||||
| Industry | Food retail | Autoparts | Sports Retail | Software | Outpatient | ||||||||||||||||||||||||||||||||||||||||
| Principal Competitor | Cakes R US | Parts R Us | Sports R Us | Tech IS Us | Health IS Us | ||||||||||||||||||||||||||||||||||||||||
| Price 1/15 | $15.25 | $23.35 | $9.15 | $6.54 | $38.25 | ||||||||||||||||||||||||||||||||||||||||
| Median Price Target | $13.00 | $25.00 | $15.00 | $4.25 | $33.25 | ||||||||||||||||||||||||||||||||||||||||
| EPS TTM Gary Porter: Gary Porter: Example criteria |
$ | 1.25 | $0.59 | $2.63 | $0.23 | ||||||||||||||||||||||||||||||||||||||||
| Forward Earnings | $1.28 | $ | 0.75 | $2.75 | $0.54 | $1.67 | |||||||||||||||||||||||||||||||||||||||
| Forward P/E | 11.9 | 31.1 | 3.5 | 12.1 | 22.9 | ||||||||||||||||||||||||||||||||||||||||
| Beta | 0.45 | 1.15 | 2.54 | 1.11 | |||||||||||||||||||||||||||||||||||||||||
| Market Cap ($bil) | $0.256 | $1.350 | $4.540 | $0.750 | $125.564 | ||||||||||||||||||||||||||||||||||||||||
| PEG Ratio | 1.30 | 2.10 | 0.35 | 1.00 | |||||||||||||||||||||||||||||||||||||||||
| S&P 500 | 2535.25 | ||||||||||||||||||||||||||||||||||||||||||||
| 90 day t-bill | 1.350% | ||||||||||||||||||||||||||||||||||||||||||||
| THIS FORMAT SHOULD BE USED FOR THE RANDOM, VALUE AND TOP DOWN PORTFOIOS. | |||||||||||||||||||||||||||||||||||||||||||||
| THIS EXAMPLE IS UNIQUE TO THE RANDOM PORTFOLIO. | |||||||||||||||||||||||||||||||||||||||||||||
| ALTER THE CONTENT OF THE ROWS TO REFLECT CRITERIA UNIQUE TO EACH PORTFOLIO. | |||||||||||||||||||||||||||||||||||||||||||||
| NOTE THAT LARGE VALUES ARE STATED IN BILLIONS, WITH A MAXIMUM OF 3 DECIMAL PLACES. |
