Professional Documents
Culture Documents
Agenda
Overview and Context Why is this important? How to prepare Two Approaches What to include
In a few weeks or a few months you will be sitting beside across the table from. . . You will be asked
So, what stocks do you like? What will be your answer?
General to specific Start with the macroeconomic, move to sector, then stock specifics
Example: Stock I like is: Revlon: Cosmetic companies are defensive in the current economic environment, the sector is generally trading at a discount and Revlon is the best managed firm in the industry with a low multiple and high earnings quality Dell: Technology companies were the hardest hit in the recession, but I believe the sector will rebound in the next few quarters. Economic data indicates that commercial spending has increased and recent announcements have suggested a turnaround. Dell is currently best positioned to take advantage of the rebound as it has shifted its business in the past year to the corporate customer. The companys negative cash conversion cycles. . .
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2. Bottom up approach
Example:
What to include Valuation Consensus earnings estimates, current price Determine relevant earnings multiples, DCF with caution, technical screens
What to include
Be brief
Memorize details about the firm book value, current price, 52-week range Accruals, goodwill impairment, off-balance sheet financing, recurring revenue, cash flow as % of earnings, charges, interest
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Earnings/EBITDA Quality
Organization:
General Organization
1) Name of Stock
2) Ticker
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4 Sentences:
Paint a vivid color to bring your stock to life Its your job to SELL Give them reasons to BUY
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Financial Summary
- 2-3 Sentences
- Highlight trends e.g. Recently announced record 4th qtr earnings of $X, which beat Street expectations by y%. - No Accounting minutiae (lose the sale)
Catalyst
- The hook! - The core why someone should buy the stock NOW! - Should be something catchy, sexy and compelling
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Supporting Data
P/E, EPS, Dividend Yield Only RELEVANT metrics (NO P/E for a Startup)
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Prepare to Defend!
- Ideally 3 reasons to buy stock (just in case asked) Stick to your story , Defend it.
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