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Portfolio Selection Paper

2580 words - 11 pages

PAGE Portfolio Selection PAGE 1
Portfolio Selection PaperFIN 402August 14, 2006Portfolio Selection PaperPortfolio selection is a critical step in the investment process when deciding on which securities and stocks to purchase. Team E was asked to select 5 securities and one publicly traded bond in order to comprise an investment portfolio. The five securities that were chosen were Home Depot, Walt Disney, Motorola, Wal-Mart, and Ford. The publicly traded bond that was chosen for this portfolio was American Funds Bond. Each of these companies will be analyzed by their financial reports such as the 10K, quarterly, and annual reports, general economic data and Federal Reserve data. Each stock ...view middle of the document...

In December of 2005, they opened their 2000th store and saw record earnings of $2.72 per share. That is a 20.4% increase. Their financial reports located on their web site show their common stock trades on the New York Stock Exchange under the ticker symbol "HD", also on the Dow Jones Industrial Average and the Standards & Poor's 500 Index. They have been a public company since 1981 (The Home Depot. 2006). Home Depot is a company that in the future will continue to grow and will dominate the home improvement market for years to come.DisneyThe Walt Disney Company (2006).The Walt Disney Company is divided into four major business segments. These four segments are Studio Entertainment, Parks and Resorts, Consumer Products, and Media Networks. Each segment consists of an integrated, well-connected business that operates in conjunction with each other to maximize exposure and growth worldwide. Disney's company objective is to be one of the worlds' leading producers and providers of entertainment and information, using its portfolio of brands to differentiate its content, services, and consumer products. The primary financial goals are to maximize earnings and cash flow, and to allocate capital profitability toward growth initiatives that will drive long-term shareholder value (Disney.com).In reviewing Disney's financial reports and data, it is shown that as of August 9, 2006, revenues for the third quarter have increased by 12%, EPS increased 36% to $0.53, compared to $0.39 in the prior-year quarter, reflecting growth in each operating segment, led by Studio Entertainment (Disney.com).In the third quarter of 2004, Disney reported a total of $56 million ($0.02 per share) in restructuring and impairment charges for the sale and closing of Disney Stores in North America. Disney's diluted earnings per share increased to $0.29 from $0.24 from the previous year, for a total increase of 21%. The third quarter of 2005, reported an increase in EPS of 41% to $0.41 from the previous year of $0.29 with a growth from Media Networks. Disney has consistently shown growth in several aspects of their businesses.As of August 11, 2006, Disney's stock prices were $29.62 at the end of the day. There was a decrease of $0.15 from the opening price of $29.62. The market cap for Disney was reported at $64,594,000 with a yield of 0.92% (Morningstar.com).MotorolaMotorola (2006).Motorola has many disparate businesses. It's the third-largest manufacturer of mobile phones in the world, a segment that accounted for roughly 50% of sales in 2004. It is also a big producer of infrastructure gear for wireless and cable networks (20% and 8% of sales, respectively). The United States accounts for 75% of revenue. The company spun off its Free-scale embedded microprocessor business to shareholders in December 2004 (Morningstar, 2006, August 12).The quarterly report for Motorola shows that in March 2006, Motorola missed analyst estimates by -3.7%. However, in June 2006, Motorola beat...

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