Unpredictable fluctuations in stock prices may cause investments to be weighted with large risks; however, through comprehensive research, savvy stockholders can get rich quick and follow the American dream.
An increase in the Free Cash Flow and Return on Invested Capital (ROIC), paired with a decrease P/E
ratio and P/S ratio, and a beta value near one would be indications of a sound one-year investment.
P is a value for the profitability of a stock by combining the stocks volatility with its soundness of an investment to postulate the level of gains expected.
For Q= (k1*A) + (k2*B) – (k3*C) – (k4*D), k 1 =k 2 =k 3 =k 4 =1.
It was considered that for this portfolio, all four indicators hold equal weight in the strength of a company and the value of its stocks to an investor.
Based on these calculations, a total of $29,959.15 was invested by purchasing 309 shares of BMC , 247 shares of CAI , 285 shares of MSFT , and 56 shares of SRX .
This new formula will give a more accurate rating of how much value a given stock would prove to have as a year long investment in comparison to portfolio one.
Based on these calculations, a total of $29,920.45 was invested in the following corporations by purchasing 278 shares of BMC , 163 shares of CAI , 168 shares of COGN , and 910 shares of QADI .
P/S is derived from sales, as compared to earnings for P/E, which is considered to be a more reliable indicator of business health .
Based on these calculations, a total of $29,894.29 was invested in the following corporations by purchasing 198 shares of CAI , 128 shares of INFY , 1,471 shares of QADI , and 86 shares of SRX .
The most accurate method to validate a forecasted model would obviously be to allow time to elapse .
It is possible to test the mathematical model at this current date and time using past information.
The model presented is not considered to be a way to give a stock a number that will quantify how much money it will make, it is simply a method of creating a sound investment strategy.
Portfolio one is not a sound investment because it esteems the different indicators unilaterally , and some indicators are better than others in determining profitability
Portfolio three is flawed, mainly due to the inclusion of the asset turnover rate .
Using the asset turnover rate of a company is not as well proven as the P/E value, and therefore makes for a slightly more risky investment.
The decision was made to invest using the strategy of portfolio two , which calls for investment in:
278 shares of BMC Software Inc. (BMC)
163 shares of Caci International Inc. (CAI)
168 shares of COGNOS Inc. (COGN)
910 shares of QAD Inc (QADI)
This profile was chosen because it takes into account the different values that the indicators most likely hold, and it uses relevant and proven indicators to boot.
31.
A Solution By Jessica Bloom Matt Giambrone Julia Haigney John LaCara Peter Werner Walt Whitman High School Team 109
Be the first to comment