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Stock Market Analysis Stock Market Analysis Taking

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					Stock Market Analysis
  Taking it to the Next Level
      Recent Stock Market History

• Stock market hit a high in March of 2000
    – Nasdaq fell from 5,000 to 1,200 (-76%)   (2000-2002)


• 3 years of negative returns followed         [2000,2001,2002]

•   2003 SP500       +26.0%
•   2004 SP500       +9.0%
•   2005 SP500       +3.1%
•   2006 SP500       +13.6%
•   2007 SP500       +3.5%
•   2008             -16.0%
Average Yearly (annual) returns of U.S. Stock Market


                  Return 2000-2008: +1.0%
                 Industry Type
         Sectors of Stock Market
•   Technology
•   Transportation
•   Retail
•   Financials
•   Energy
•   Health Care
•   Defense
•   New Industries (looking to the future…)
Worksheet #2
 What is company worth?
Company A        Company B
       2 Goals of a Company

1) Maximize Profits       (each year)


2) Grow Profits        (over time)




 Companies that grow
    PROFITS                                have the best
     the fastest                        stock performance
            What is a P.E. ratio?
• Price to Earnings Ratio = [Price of Stock / Earnings per Share]


• Stock Price = 20        Earnings = 2.00 per share

• Price to Earnings Ratio :    20/2= 10 P.E.
   Average, High & Low P.E.’s

• The current P.E. for the SP500 is 18

• Below 10 P.E. => considered low

• Above 35 P.E. => considered high
SP500 Average PE 1900-2006 is 16
                 Growth Rates
• Investors care about how FAST companies can
  GROW profits

• P.E. ratios reflect GROWTH rate expectations

• The HIGHER the P.E. => the FASTER the market
  expects Profits to Grow
Analysis of 2 Companies




About Company
A Tale of 2-Companies




            Current P.E.    11                40

      Current Market Cap:    $200 Billion   $160 Billion


       Profits per year     18 billion       4 billion
       Risk vs. Reward
• Higher PE stocks are generally more risky

• Lower PE stocks have less price volatility

				
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posted:11/22/2011
language:English
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