Portfolio Project Initial Selection
The following is an analysis of my portfolio. This is a widely diverse portfolio utilizing proven, large cap equities only. I will only be investing in firms that pay dividends. For the purposes of simplicity, I will allocate the fictional $1,000,000 evenly over the five different equities. Consequently, each investment will amount to $200,000. This analysis will contain a short summary of each company, a specification for why its industry was chosen, and finally a rationale behind the chosen company representing that industry. Below is a table I have provided summarizing the information.
I will begin the portfolio analysis with The Boeing Company (BA). Boeing is a multinational firm that manufactures aerospace products for both commercial and government agencies. These products can range from a commercial airplane to a missile defense system used by a government agency. Boeing is the largest firm in the transportation and equipment manufacturing industry and has a market capitalization of $88.13 B. One share of BA is currently trading for $123.61 and pays a dividend of $2.92. My rationale for choosing not only this industry but also The Boeing Company stems from safety and security. This safety and security represents the products manufactured and the investment itself. Currently air travel is fastest way to trek, but if another technology were to be developed, I would assume Boeing had its hands in it. Boeing manufactures products and also services them; generating multiple revenue streams. Finally, from a macroeconomic perspective, Boeing can sell arms and equipment to both sides of disagreeing nations; ultimately monopolizing the war machine. The next equity representing my portfolio is Wal-Mart (WMT). Wal-Mart embodies the retail sector, the next industry in portfolio. In order to symbolize Wal-Mart’s size I could show the reader financial statements, various economic facts about the company; however I will merely indulge to the reader that Wal-Mart currently has 2.2 million full-time employees. Wal-Mart has a market capitalization of over $246 B; that particular fact could be interpreted to be a near market takeover. This firm is a giant and will represent this section of my portfolio handily. A current share of Wal-Mart stock sells for $76.35 and pays a dividend of $1.92. Let me now transition and move on to the next segment of the portfolio; McDonald’s (MCD). This investment represents the restaurant, bars, and food services industry. I feel that the current economic climate is causing many households to have two income earners. This will often require families and single individuals alike to “eat out” more often. McDonald’s is keenly aware of this and has manufactured its current menu to serve a wide array of tastes. This firm is multinational and is increasing franchises worldwide, daily. McDonald’s has a market capitalization of $90 B; a large amount for this sector. In order to draw a comparison; Burger King World wide has a market capitalization of 11 B. A share of McDonald’s stock currently sells for $92.60 and pays a healthy, welcomed dividend of $3.40. The Goldman Sachs Group (GS) represents the next segment of the portfolio, finance and insurance. Keeping with my diversified plan of attack, the finance and insurance sector is typically a safe bet. Even with the most recent recession, Goldman continued to grow. Goldman Sachs provides investment banking, securities, and investment management services to corporate clients, governments, and individual investors alike. Goldman Sachs has a market capitalization of $84 B. In comparison, J.P Morgan Stanley has a market capitalization of $224 B. A current share of Goldman Sachs sells for $186.32 and pays a dividend of $2.40. I will round out the...
References: Industry Directory. (n.d.). Retrieved October 25, 2014, from http://www.hoovers.com/industry- analysis/industry-directory.html
(n.d.). Retrieved October 25, 2014, from http://finance.yahoo.com/q/cp?s=^DJI Components
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