Commerce assignment - Frank Chan
When choosing a company to invest in within the stock exchange, a wise decision would be to undergo methods for selecting stocks for investment. These include sector analysis, Quantitative cumulative value analysis, management issues and technical analysis. 1. Sector analysis
Sector analysis involves and identification and analysis of various industries or economic sectors that are predicted to demonstrate superior performance. Research indicates that the health of a stock's sector is as important as the performance of the stock itself. Hence, even the best stock that is located within a weak sector will usually perform poorly. One method of analyzing a company's growth potential is examining whether the amount of customers in the overall market is expected to grow. Additionally you should monitor sectors that are nearing the bottom of performance ranking for possible signs of an impending turnaround 2. Quantitative cumulative value analysis
Quantitative cumulative value analysis is a method that analysis past records of assets, earnings, sales, products, management which are used to predict future projections and how they may affect a company’s future success or failure. A company’s worth is based largely on projections of future performance. By appraising a firms prospects a stocks intrinsic value can be determined and a particular stock or group of stocks can be determined if they are undervalued or overvalued at the current market, a company is worth the combined sum of its future profits, while at the same time being discounted in consideration of the time value of money. To determine the value of a company you will have to look at several variables including Future performance, cash flow and revenue: Future performance: a company’s worth is largely based on the predictions of future performance, past performance is important only for modeling how the company will perform in the future. Cash flow: Cash flow is cash on...
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