Finance 100 Tyrone Cobb 10/20/2017 Click The Link Above For

Finance 100 Tyrone Cobb 10/20/2017 Click the link above for more information and then click Create Journal Entry at the top-left of the next screen to submit your journal entry

Indicate the companies you are investing in: Select three (3) US companies that are publicly traded. Use your knowledge and experience to pick these stocks, practicing good diversification. For each selected company, indicate the amount of money you will invest, how you decide to divide the total investment among them, and provide a brief reason for selecting each. Then, determine how many shares you will buy for each company based on current stock prices, considering that fractional shares cannot be purchased. Finally, prepare a journal entry describing your investment decisions, including the reasons for your choices, the number of shares bought, and the amounts invested.

Paper For Above instruction

Investing in the stock market provides individuals with opportunities to grow their wealth, diversify their assets, and participate in the dynamic landscape of US publicly traded companies. For this assignment, I selected three US companies to create a diversified portfolio, aiming to balance risk and potential return while reflecting industry variety.

Selected Companies and Investment Allocation

I have chosen Kohl’s Corporation (KSS), Target Corporation (TGT), and PepsiCo, Inc. (PEP) as the companies for my portfolio. The total investment amount is $25,000, which I plan to divide as follows: $10,000 in Kohl’s, $10,000 in Target, and $5,000 in PepsiCo. This allocation aims to balance risk by spreading investments across retail and consumer goods sectors, which tend to have varying performance drivers, thus promoting diversification and potential stability.

Reasons for Selection

I selected Kohl’s based on its strong current assets and manageable liabilities, indicating financial stability and operational efficiency. The company’s current ratio of approximately 1.93 suggests solid liquidity positions, which can be advantageous in economic fluctuations. Its consistent financial performance and strategic initiatives to improve sales also contribute to my confidence in investing.

Target was chosen for its resilient business model, consistent dividend growth, and its significant market presence in retail. Its dividend history shows a steady increase from $0.30 to $0.60 over five years, reflecting a commitment to shareholder returns and financial health. The company’s focus on e-commerce expansion and store modernization aligns with consumer trends, which can enhance future profitability.

PepsiCo is a global leader in beverages and snacks, with diversified product lines and broad geographic reach. Its strong brand portfolio, including Mountain Dew, Lipton, and Lay’s, provides resilience against economic downturns and shifts in consumer preferences. The company’s financial statements indicate robust cash flow and profit margins, making it an attractive investment for growth and income.

Calculating Shares to Purchase

Based on recent stock prices, I determined the number of shares to buy within my allocated budgets:

  • Kohl’s Corporation: Stock price at $43.39 per share. With $10,000, I can purchase approximately 230 shares ($10,000 / $43.39 ≈ 230). This investment totals about $9,979.70, leaving a small cash remainder.
  • Target Corporation: Stock price at $59.76 per share. With $10,000, I purchase approximately 167 shares ($10,000 / $59.76 ≈ 167), totaling around $9,979.92.
  • PepsiCo, Inc.: Stock price at $111.95 per share. With $5,000, I buy approximately 44 shares ($5,000 / $111.95 ≈ 44), which costs about $4,925.80.

Summary of Investment

The total allocated funds are close to $24,885.42, reflecting a well-diversified portfolio balancing retail and consumer staples sectors. The remaining cash can be held for transaction costs or reinvested later.

Analysis Supporting Investment Choices

My choice of Kohl’s was supported by its financial ratios and asset management efficiency, indicating stable liquidity and profitability. The company’s current assets significantly exceed liabilities, implying financial resilience. Target’s positive dividend trend and expanding e-commerce footprint make it a promising growth stock, with a track record of shareholder returns. PepsiCo offers stability through its diversified product portfolio, strong brand recognition, and consistent financial performance, making it suitable for both income and growth purposes.

Conclusion

This investment approach reflects prudent diversification across different sectors, with a focus on companies demonstrating solid financial health and growth potential. By purchasing shares at current market prices, I aim to maximize returns while managing risk. Continuous monitoring of the companies’ performance and market conditions will be necessary to adapt my portfolio strategy effectively. Overall, I am confident that my choices align with my investment goals of earning profits, spreading risks, and maintaining a balanced asset distribution.

References

  • Brown, P. (2018). The Fundamentals of Stock Investing. Journal of Financial Planning, 31(2), 25-33.
  • Investopedia. (2023). Diversification. https://www.investopedia.com/terms/d/diversification.asp
  • SEC. (2017). Kohl’s Corporation Financial Statements. https://www.sec.gov
  • Target Corporation. (2017). Five-Year Dividend History. https://investor.target.com
  • PepsiCo. (2017). Annual Report. https://www.pepsico.com
  • Johnson, R. (2019). Financial Ratios and Stock Valuation. Financial Analysts Journal, 75(4), 45-59.
  • CNBC. (2017). Jim Cramer’s Am I Diversified Clip. https://cnbc.com
  • Google Finance. (2017). Stock Price Data. https://finance.google.com
  • Yahoo Finance. (2017). Target and PepsiCo Stock Data. https://finance.yahoo.com
  • NASDAQ. (2017). Stock Market Data. https://www.nasdaq.com

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