RESEARCHING AND STOCK PICKING

H a s a n Z a i d i

M r M a c p h a i l

0 2 - O c t - 1 2

Champion

This is my stocking portfolio where I have picked stocks

based on different types of stock. The types stock I choose

were Blue Chip, Turn around and Cyclical.

INDEX

Home Depot

Stock Type ……………………………………………………………………….Page 2

Business Summary……………………………………………………………Page 3

Why Invest? ..........................................................................Page 4

Yahoo

Stock Type ………………………………………………………………………Page 7

Business Summary………………………………………………………… Page 7

Why Invest? ……………………………………………………………………Page 8

Ford Motor

Stock Type: ……………………………………………………………………..Page 10

Business Summary……………………………………………………………Page 10

Why Invest? …………………………………………………………………….Page 11

Bibliography …………………………………………………………………….Page 13

1

1. https://corporate.homedepot.com/OurCompany/History/Pages/default.aspx

2. http://ycharts.com/companies/HD/market_cap

3. http://seekingalpha.com/article/896281-a-close-look-at-home-depot-cautiously-optimistic-

outlook?source=marketwatch

4. http://ycharts.com/companies/HD/dividend_yield

2

Stock type:

Home Depot was founded in 1978 by Bernie Marcus and

Arthur Blank. The founders Bernie and Arthur vision was

of a one-stop shopping for do it yourself, which came to

alive when they opened their first 2 Home Depot stores

on June 22, 1979. In 1984 the Home Depot opened its

100th store which demonstrated enormous growth span

over the 9 years! 1 As of now September 2012 Home

Depot market capitalization is 92.41B, making it a large

company.2 The company has operating margins of

10.08% over the last 12 months and a profit margin of

5.96%, which is significantly greater than competitors Lowe's and Lumber Liquidators.3

Due to high profit margin compare to other companies and its main competitor Lowes, it

makes Home Depot as a leader in its industry.Home depot has paid dividends

throughout history of its creation, if you look at the image below it shows its 10 year

dividend history rate.4

Some characteristics of a “blue chip” company YES NO

Longevity X

Excellent Financial Shape

X

Entrenched as leader in its field

X

Pays Dividends X

5. http://www.homedepot.ca/corporate-affairs

3

Business summary

Home Depot main branch is currently located in 2455 PACES FERRY ROAD, N.W.

ATLANTA, GA 30339 United States. Home Depot follows its slogan “do-it yourself”, and

also does home improvement, construction and building maintenance. If customers

need professional help to renovate their homes, then Home Depot provides

professionals to do the job. Home Depot is also a rent house for tools for professional

customers, including repair and remodel contractors, special services who don’t have

variety of tools. The Home Depot operates 180 stores across Canada with space of

average more than 100,000 square feet, with approximately 20,000 square feet of

outdoor seasonal space. Home Depot has more than 40 000 items stocked in its each

shop for customers. Home Depot is traded at NYSE and is included in the S&P 500

Index and the Dow Jones 30 Industrial Index.5

Ticker symbol HD

52 week high 60.58

52 week low 31.03

Current share price $60.37

Competition Lowes, RONA, Home hardware

1. https://corporate.homedepot.com/OurCompany/History/Pages/default.aspx

2. http://ycharts.com/companies/HD/market_cap

3. http://seekingalpha.com/article/896281-a-close-look-at-home-depot-cautiously-optimistic-

outlook?source=marketwatch

8. http://ycharts.com/companies/HD/dividend_yield

4

Why invest:

Home Depot since opening its first store went on and expanded to 100 stores in just

span of 9 years, from 1979 to 1989! Their mission statements do it yourself, and with

home depot providing expertise along the way, as well as merchandise and tools

caused them to grow into a huge corporation.1 Looking at Home depot financial records

from 2008 to 2012 its profit and revenue income has increased drastically as shown in

the image 1 on the next page.2 As you can see from the image 1, from 2008 to 2011 the

revenue decreased drastically from 77.35 B to 68B, but in 2012 it went back up to 70B

which show signs of recovery in the industry. The gross income decreased as well from

2008 to 2011 24.3B to 21.69B, but in 2012 it increased to 22.69 B making it highest

gross income after 2008. If you look at image 2 posted below image 1, you can see the

comparison over the years of revenue vs. operating income vs. operating margin, and

revenue vs. net income and profit margin3. The operating income has increased in 2012

and same as revenue. Basically this all shows a sign of recovery in the home depot

company, which means in the future there is a good chance of the stock rising. Home

Depot shares have been trading higher over the last year, making it one of the best

performing large cap stock. Surprisingly Home depot has a higher returned gain 79 %

more than Apple, showing that Home depot is more of a better choice as an

investment.3 Even though Home depot has a yield of 1.90% which is not attractive

enough for the investors, but its ability to increase margin, cut cost and remain stable

during the tough economic times, shows excellent management and efficient executive

staff.8 Those are the reason why I would invest in Home Depot for long term rather than

short term. By investing in long term there is a huge chance that Home Depot will be

making more money and share prices going up, which all of it depends on current real

estate market which is improving.

5

1.

2.

6

1. http://docs.yahoo.com/info/misc/history.html

4.http://money.cnn.com/2012/09/26/technology/yahoo-strategy/?source=cnn_bin

7

Stock type:

Yahoo was started by David Filo and Jerry Yang, Ph.D. candidates in Electrical

Engineering at Stanford University, originally they created yahoo for their guide in a

campus trailer in February 1994 as a way to keep track of their personal interests on the

internet. Since then Yahoo went on to become one of the most successful companies

around the world in search engine.1 Recently yahoo has come out with a turn around

strategy by their newly hired CEO Marissa Mayer, which involves answering the

question what is yahoo? Over the past few years yahoo went from being one of the best

search engine to Microsoft associated bing search engine. The CEO is trying to redefine

yahoo into more user friendly web service. CEO will give employees more control of

their projects and launch them if they have potential to generate over $100 million dollar

revenue. Marissa Mayer is also firing old management and bringing in new faces,

recently Chief Financial Officer Tim Morse left the company. Lastly Yahoo is going to

buy small companies, unlike before when they bought small companies were usually for

the products but now it’s for tech talent.4

Business summary:

Yahoo main branch is located in 701 First AvenueSUNNYVALE, CA 94089 and it’s

traded in NASDAQ.1 Yahoo is basically like Google offers everything that Google does,

except mobile services. Yahoo has its own platform of mail, messenger, search engine

and news. Yahoo has over a million users and site visitors who use yahoo daily. Yahoo

market cap is 18.88B and its revenue for most recent quarter is 1,217.79M.4

Ticker symbol YHOO

Current Share Price 15.98

52 week high 16.79

52 week low 13.11

Competition: Google, AOL, Microsoft (bing).

5. http://www.crunchbase.com/person/marissa-mayer

6.http://www.cnbc.com/id/49246547

7. http://ycorpblog.com/2012/09/25/ken-goldman-cfo/

8

Why Invest

I believe the new CEO has taken a lot of positive steps toward change. But before all

that we have to look into the new CEO profile, she was a chief executive of Google and

was a key figure in product management and design efforts for Google web search,

images, news, books, products, toolbar, and iGoogle. She has been recognized by

Fortune magazine has listed her for the past 3 years on their annual Most Powerful

Women’s list, and she was the youngest ever to appear on the list, furthermore also

contributions and leadership have been recognized by numerous publications including

the New York Times, Newsweek and BusinessWeek.5 Judging from her past

contribution and recognition by various magazine and newspaper, she has the ability to

change yahoo around, she also brings experience from her past working with Google

that will bring more creative ideas to the table. As of now recently Chief Financial Officer

Tim Morse has left the company. Morse, who kept a tight rein on finances since he took

over as CFO in 2009, will be replaced by Ken Goldman, the CFO of Fortinet who has

three decades of experience at software and Internet companies, including Siebel

Systems.5 Ken Goldman is one of the most respected and accomplished CFO in the

technology industry with over 25 years of experience.7 When Ken Goldman was in

Siebel Systems he was the key figure that helped restructure the whole company, which

is what yahoo exactly needs.6 I believe the reason yahoo was down for couple of years

was because regular CEO changes, yahoo went through 4 CEO in 2 years, which

resulted in lack of top leadership. Another reason yahoo was down because of its

pervious 2 CEO one of them been Jerry Yang who reject Microsoft offer to buy yahoo

and Scott Thompson who had problems with his resume.6 Therefore, I would invest in

yahoo short term since the strategy is it’s in beginning phases so it could take a while

before we get to know how everything is going on. Image shows that revenue is rising

slightly.

9

1. http://www.theautochannel.com/news/2012/06/01/038126-ford-motor-company-posts-gains-

across-cars-utilities-trucks-may.html

2. http://www.companyspotlight.com/15733/Ford-Motor-Co

10

Stock type:

Ford motor company is an American based automaker and countries #1 top company

selling automaker.1 It is also one of the top 10 companies in world automaker industry.

Ford was founded by Henry Ford in Dearborn, Michigan and was incorporated on June

16, 1903, since then the company has gone to become one of the most successful

companies and was one of the few survivors of great depression. Ford Motor produces

cars, trucks and sells them worldwide.

Business summary:

Ford is currently located in 1735 Sydney Rd CAMPBELLFIELD, VIC, 306, and it trades

in NYSE. Ford Motor Co. produces automobiles and sells them across the world. It

produces cars, trucks, the company also engages in other business; financing vehicles.

Its automobile industry includes Ford and Lincoln.2

Ticker symbol F

52-week high $13.05

52 week low $ 8.82

Current share price $10.09

Competition: Honda, Toyota, GM

1.http://www.theautochannel.com/news/2012/06/01/038126-ford-motor-company-posts-gains-across-

cars-utilities-trucks-may.html

3.http://www.google.com/finance?q=NYSE%3AF&fstype=ii&ei=eapoUOj9LIb_qAGE4gE

5. http://seekingalpha.com/article/895511-3-reasons-to-buy-ford-now-for-a-long-term-investment

6. http://www.opposingviews.com/i/politics/ford-motors-nysef-teamed-weyerhaeuser-nysewy-make-

automotive-applications-utilizing

11

Why invest

Even though we are going through tough economic times, with Europe in debt crisis

causing cyclical stocks like Ford sale to drop, but I still believe Ford is still a good

investment for long term for these reasons: Ford's 3.17% sales shortage throughout the

past five years is the lowest amongst these automakers (Honda, Toyota, and GM).

Ford's 158.4% ROE (return on equity), 4.6% operating margin and 7.2% profit margin

are the highest among these automakers as well.5 In August Ford sales dropped by

2.3% 5 causing its shares to go down because of Europe crisis but looking at the image

13 you can see that investors are starting to reinvest in ford and its share price are going

up which possibly means cyclical stocks like Ford are going up. Ford is coming up with

a new technology with the help of Weyerhaeuser Company, which will increase the

process rate of the cars and save more fuel. The new technology is using tree fiber to

make plastic “cellulose” in its few plastic composites used to manufacture its vehicles.

The company said that it can significantly decrease carbon dioxide discharge and

weight by using cellulose in automotive applications.6 Pace of processing can be

increased up to 40 percent. Ford Company used soy bean competent in its

manufacturing which saved approximately 5,000,000 pounds of petroleum every year.6

This means the Ford cars are eco friendly and take a lot less gas making it ideal

company in the future for car use, since oil prices these days are higher. Ford has a

strong background history it was one of the few companies to survive the first great

depression in the 1940s.1 It’s been over 100 years since ford was created by Henry

Ford and it went out to become one of the most profitable companies in the world. Ford

was considered to be a blue chip company at some point.7

12

1.

2.

13

Bibliography:

"History." Home Depot. N.p., n.d. Web. 2 Oct. 2012.

https://corporate.homedepot.com/OurCompany/History/Pages/default.aspx.

"Home Depot inc." Market Watch. N.p., n.d. Web. 29 Sept. 2012.

<http://www.marketwatch.com/investing/stock/hd/financials>.

"The Home Depot, Inc.: NYSE:HD quotes & news - Google Finance." Google. N.p., n.d. Web. 2 Oct. 2012.

<http://www.google.ca/finance?client=ob&q=NYSE:HD>.

Baldwin, Amy. "A Close Look At Home Depot: Cautiously Optimistic Outlook - Seeking Alpha." Stock

Market News & Financial Analysis - Seeking Alpha. N.p., n.d. Web. 2 Oct. 2012.

<http://seekingalpha.com/article/896281-a-close-look-at-home-depot-cautiously-optimistic-

outlook?source=marketwatch>.

"HD: Summary for Home Depot, Inc. (The) Common S- Yahoo! Finance." Yahoo! Finance - Business

Finance, Stock Market, Quotes, News. N.p., n.d. Web. 2 Oct. 2012. <http://finance.yahoo.com/q?s=HD>.

"Home Depot Market Cap (HD)." YCharts - Stock Charts, Stock Ratings & Economic Indicators. N.p., n.d.

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"Home Depot Market Cap (HD)." YCharts - Stock Charts, Stock Ratings & Economic Indicators. N.p., n.d.

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"Affairs." Home Depot. N.p., n.d. Web. 2 Oct. 2012. <www.homedepot.ca/corporate-affairs>.

"History." Yahoo! Finance . N.p., n.d. Web. 2 Oct. 2012. <docs.yahoo.com/info/misc/history.html>.

Smith, Mat. "Yahoo reports Q2 2012 earnings, revenue remains unchanged -- Engadget." Engadget. N.p.,

n.d. Web. 2 Oct. 2012. <http://www.engadget.com/2012/07/17/yahoo-q2-2012-earnings/>.

"Yahoo! Inc.: NASDAQ:YHOO quotes & news - Google Finance." Google. N.p., n.d. Web. 2 Oct. 2012.

<http://www.google.com/finance?cid=658890>.

"Marissa Mayer's Yahoo turnaround starts to take shape - Sep. 26, 2012 ." CNNMoney - Business,

financial and personal finance news. N.p., n.d. Web. 2 Oct. 2012.

<http://money.cnn.com/2012/09/26/technology/yahoo-strategy/?source=cnn_bin>.

"Marissa Mayer | CrunchBase Profile." CrunchBase, The Free Tech Company Database. N.p., n.d. Web. 2

Oct. 2012. <http://www.crunchbase.com/person/marissa-mayer>.

Brodie, Lee. "Yahoo! Finally a Stock to Shout About: Cramer - Mad Money - CNBC." Stock Market News,

Business News, Financial, Earnings, World Market News and Information - CNBC. N.p., n.d. Web. 2 Oct.

2012. <http://www.cnbc.com/id/49246547>.

14

"Veteran Finance Leader Ken Goldman to Join Yahoo! as CFO | Official Yahoo! Blog - Yodel Anecdotal ."

Official Yahoo! Blog - Yodel Anecdotal . N.p., n.d. Web. 2 Oct. 2012.

<http://ycorpblog.com/2012/09/25/ken-goldman-cfo/>.

"Ford Motor Company May 2012 Sales - Gains Across Cars, SUV's, Trucks; Fusion Sets Sales

Records." 2013 Car Reviews, 2012 Car Reviews, 2011 Car Reviews, New Car Research, Used Car

Research, TACH-TV Car Videos, Automotive News | The Auto Channel Super Blog. N.p., n.d. Web. 2 Oct.

2012. <http://www.theautochannel.com/news/2012/06/01/038126-ford-motor-company-posts-gains-

across-cars-utilities-trucks-may.html>.

"Ford Motor Co. | Company Spotlight Profile." Company Spotlight. N.p., n.d. Web. 2 Oct. 2012.

<http://www.companyspotlight.com/15733/Ford-Motor-Co>.

"Financial Statements for Ford Motor Company - Google Finance." Google. N.p., n.d. Web. 2 Oct. 2012.

<http://www.google.com/finance?q=NYSE%3AF&fstype=ii&ei=eapoUOj9LIb

"FORD MOTOR CO (F:New York): Stock Quote & Company Profile - Businessweek." Investing & Stock

Research by Company and Industry - Businessweek. N.p., n.d. Web. 2 Oct. 2012.

<http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?ticker=F>.

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News & Financial Analysis - Seeking Alpha. N.p., n.d. Web. 2 Oct. 2012.

<http://seekingalpha.com/article/895511-3-reasons-to-buy-ford-now-for-a-long-term-investment>.

Sentinel, Statesman. "Ford Motors to Make Auto Applications Using Natural Fiber Materials." Opposing

Views | Issues, Experts, Answers. N.p., n.d. Web. 2 Oct. 2012.

<http://www.opposingviews.com/i/politics/ford-motors-nysef-teamed-weyerhaeuser-nysewy-make-

automotive-applications-utilizing>.

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