This is a graded discussion: 15 points possible due Dec4 Investing in Stocks and

Question

This is a graded discussion: 15 points possible due Dec4 Investing in Stocks and Bonds: Let's Talk about it Respond to one of the following two questions and you must also respond to two other students by 11:59 pm on Calendar Due Date. Three posts total are expected for this discussion board and it is worth 15 points Three Good Companies. Make a list of three products and services that you buy on a weekly or monthly basis and the companies that sell them. Offer your initial views on whether each company would be a good place to invest money. or Sources of Information. If you had an investment portfolio of stocks worth $20,000, identify three sources for information that you would likely use to keep abreast of current information affecting your investments Search entrices or author Unread Subscribe Reply

Explanation / Answer

Let us choose the 3 items. I have chosen 2 products and 1 service, just to keep a nice mix of things.

The items along with the companies that produce them are:

1. Soup - Campbell

2. Beer - Anheuser-Busch InBev (Brand- Budweiser)

3. Streaming Service - Netflix

Before we get into each company, it is required of us to know the answer to certain questions about wach company

-What does the company do? Which sector is it in?

-What is the health of tht sector?

-Is the company profitable?

-Company's history/outlook/valuation of stocks

-Who are the main competitors of the company?

-Management of the company

-Financials of the company and the Annual Report

Campbell Soup Company

The 148 year old Food giant is famous for their soup. But just because a company is old, one must not blindly trust them with all their investments. The most important factors in the investing decisions here were:

1) ROE of campbell is = 56% where as the general ROE for the F&B industry is = 10.91%

2) EPS from the company is quite high and have improved over the last to years of 2015 and 2016 to 1.81 to 2.13 respectively.

3) The Interest coverage ratio of the Campbell = 12.54, and have been consistently high for almost a decade. This is a very encouraging number, Meaning the company has little or no risk of running into debt default.

4) The ROA is 11.48% and Current Ratio = 0.79. Also the Inventory Turnover Ratio is 66. All these data is achived from July 2017 quarter. The ROA is efficient and from the other financial ratios we concur that Current assets of campbell are low and overall inventory is very well managed.

Also, the company has undergone Acquisitions of Kelsom and Garden Fresh and yet have maintained the profitability. Plus it has hiked up sales. This is the sigh of a strong enterprise. Moreover, the Intangible asset value of Campbell Soups is strong.

Hence, Campbell Soups is a good investment.

Anheuser-Busch InBev

A relatively young company Anheuser-Busch InBev, established in 2008, have created a name for themselves and the brand Budweiser is known the world over. From the inception, the Bevarage company has had a profitable and strong financials. The key financials of the company are given below:

1) The ROE is 7.25% compared to an industry average of 9.25%. The ROI is approximately = 5%, which is on the higher end.

2) EPS of Anheuser-Busch InBev is 1.98 which is low compared to many of their competitors.

3) The interest coverage ratio is 2.6 which is average for a company running for about 9 years with a famous brand.

4) Net profit margin in 2016 has been 7.6 whereas the same in 2.15 was 2.45. Hence there has been a good growth in one year. The year 2015 was not a good year for the company since several new competitors were launched, but Anheuser-Busch InBev has gained back it's market share.

5) Market share of Anheuser-Busch InBev is the higest of beer market in the world at 20.8. However, it is dropping since the demand for freshly-brewed domestic beer has increased exponentially.

Hence, the investment in Anheuser-Busch InBev is a judgement call. There are several factors which suggest that it will still be a good investment tomorrow.

Netflix

A 20 year old company, formed in 1997, provides streaming services all over the world and has begun producing movies and TV series. Netflix has started expansion and is now running markets in the Asia as well. Floowing the provious patters, we will first look at the key financials of the company. Them being:

1) EPS of 1 has been offered by Netflix in 2016 which is more than that of 2015. Hence, good investment as of now.

2) The ROE and ROI of the company are 15.03 and 11.02 respectively, which is extremely high, even for a company in this sector.

3) The Asset turnover of the company has consistently been < 1, which makes sense since this is a service providing company.

4) Net profitability margin has always been high and in 2016 was 4.1%.

5) In the months of April 2017, Netflix reached 75% of the video streaming viewersip in the US.

This is a company which has a clear future and is not going into losses anytime soom. Investments, especially mid-term investments can be easily made here.

I would also suggest that you go throught the Director's annual report of the companies, it is short and wont take very long. Also, read some of the recent news regarding the companies in the context.

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