Financial Stock Market Analysis

Last Updated: 25 Jun 2021
Essay type: Analysis
Pages: 16 Views: 193

As per the present condition of the global economy, there is no doubt the world is experiencing a major financial crisis near the worst since the first global financial depression as seen observable in the United States’ early fiscal slump. With the businesses and industries from around the globe filing their own versions of bankruptcy, it is then considered as a strong indication of current downturn in the global economy as well as the worldwide financial slump in stock market.

In this regard, it has come to the awareness of many people, more especially among the investors, that investing in stock market is facing a great challenge that would test the strength and competitiveness of the stock market over the current global financial crisis. More so, there are numerous financial and economic experts that mainly believe stock market is now becoming more volatile and risky for many of the investors around the globe, as there are various reasons and events that could take place in any moment, which could directly affect the behavior of stock market.

In a sense, there are different reasons and factors that could be considered as responsible in dictating the movement and/or the behavior of today’s stock market. Examples of these driving factors include the ever changing price of crude oil in the global market, the occurrence of war and violence in different countries abroad and the current economic downturn of major industrial countries in the world like the United States and other major economic players in Europe. With this notion, this research paper would primarily concentrate on the topic of analyzing the present behavior of stock market.

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Moreover, this research would as well focus in determining the fundamentals of investing in stock market and the major factors that have direct impact to its performance. More so, this paper would take the opportunity of assessing the key strategies that could possibly be utilized in creating a well-diversified stock portfolio. With the fact that there are numerous modern ways that could be used as reliable research engine in analyzing the stock market, this paper would then work in naming the major benefits of using online financial tools like yahoo finance & investopedia in performing the said assignment.

Nonetheless, this research paper holds on to the objective of enlightening the significance of analyzing the stock market from the investors’ point of view, as seen essential in deciding to place investment in the stock market. Thus, with the use of various businesses, this paper will render brief analysis and stock ratings of these companies. The following will be discussed: • Significance of Owning and Investing in the Stock Market • Fundamentals of Investing in the Stock Market • Outlook of Economy in Stock Market • Major Factors that Affect the Behavior of Stock Market

• Key Strategies in Developing a Well Diversified Stock Portfolio • Benefits of Using Online Financial Tools • Brief Company Analysis and Stock Rating I. Wal-Mart Sores II. Arcelor Mittal III. Suncor Energy Inc. IV. Dell Inc. V. Johnson & Johnson VI. Pfizer Inc. VII. Comcast Corporation VIII. PF Chang’s China Bistro Towards the end of the paper, this research intends to draw definite illustration as to how the stock market is behaving and performing for the past several years, knowing all the facts and latest developments in the global financial crisis.

This paper would render specific explanations regarding the significance of basic fundamentals before investing in the stock market. More so, this would exemplify the proper ways and the most positive approach of investing in the stock market through the use of key strategies and examination of different stock ratings of the companies stated above. Significance of Owning and Investing in the Stock Market A stock is a proof that an individual or investor owns a small or major fraction of the company (“The Stock Market,” n. d).

Investing in stock would also mean that an investor would shoulder an equal or small proportion of everything that the company possesses like properties, office equipment and other machineries needed for the company’s operation (“The Stock Market,” n. d). More so, stock is regarded as the representation of exact partition or share in the company that an individual or investor owns (“The Stock Market,” n. d). There are various benefits associated in investing and owning a stock. One of this is that whenever the company profits, the investor which hold for a particular stock in that company would profit as well (“The Stock Market,” n.

d). For instance, an investor bought a stock in Nike and that company has just released a new line of footwear, which has been an instant massive profit success with many people buying that product and let the company profit well successfully, the investor would get an equal share of that great revenue accordingly. More so, owning a stock also renders the investor’s right to have a voice in the decision making that could directly influence the performance of the entire company (“The Stock Market,” n. d).

However, apart from these positive accounts of owning and investing to stock market, the probability of losing tremendous amount of money is always a reality, more specially when the basic methods of investing in the stock market is overlooked. Fundamentals of Investing in the Stock Market In any given instance of investing, there are specific questions that the investor or individual must answer first to be able to achieve the focus of such investment scheme accordingly. These basic questions include: • What type of investment return does an investor anticipate to achieve?

• How much money does an investor is willing to invest? • How does inflation may possibly impact this investment? • How much risk does an investor is willing to take? • What are the consequences of this investment decisions? In a sense, it is observable that these questions portray essential grounds in planning for investment in the stock market. As the fundamentals of investing in the market involve basic analysis of the market and of prospected business, these questions may possibly be useful as a steady guide in thoroughly analyzing investment in the stock market.

Investing and buying a stock in the market can only be done among the companies that are publicly held and not set to private (“The Stock Market,” n. d. ). In this regard, investors can not invest or buy a stock in the companies that are privately managed. However, most of the bigger businesses around the globe are held publicly and that serious investors can buy their own stocks among these business. Before investing in the stock market, the investor and/or the concerned party must first determine the company as well as the industry to invest their money.

Investors must then consider that thought and make sure that they are investing in a strong industry and ensure that the company of which they are investing their money is strong and growing (“The Stock Market,” n. d. ). Choosing for a company and industry to invest is not an easy task to be done (“The Stock Market,” n. d. ). This requires critical thinking and major decision making to be able to ensure the profitability of investment (“The Stock Market,” n. d. ).

Thus, Fundamental analysis on the methods that could be utilized in investing in the stock market is necessary, which mainly study the basic elements of investing in the stock market such as assessing the company’s current management and place in the market (“The Stock Market,” n. d. ). Fundamental analysis of investing in the stock market involves the background check of the company and/or the history of stock that an investor intends to invest in. This may include the review of company’s performance in the stock market for the last the years that have passed (“eHow Personal Finance Editor,” n. d. ).

For instance, comparing the quarterly growth of the company using percentages is one of the better means to do it. Whenever a company has increased its overall sales from $1 per share to $1. 10 last year, then there is a better possibility that this year, it will rise by more than $. 10 per share and persist increasing at the same rate, which serve as a clear indication of ideal stock investment (“eHow Personal Finance Editor,” n. d. ). Another fundamental step of investing in the stock market is to look and study the public financial information of the company, which the investor intends to buy a stock of (“eHow Personal Finance Editor,” n.

d. ). For instance, if the said company has not proven a strong and competitive profitability for the past years, the probability is that the company may possibly profit in lesser terms compared to those which did well. In this case, the notion of investing in this stock may seem to be a bad idea, more especially that the company has failed to profit significantly to be able to ensure the competitiveness of its business (“eHow Personal Finance Editor,” n. d. ).

On the other hand, whenever the company has drawn a sturdy growth of fruitful profit, it is then considered to make an investment in its stock since there are better chances that the company’s prolific profit may continue to rise, which accordingly serve as probable indication of greater profits for the investor as well (“eHow Personal Finance Editor,” n. d. ). Moreover, determining the marketability of the company’s product and/or services is also one of the basics of investing in the stock market (“eHow Personal Finance Editor,” n. d. ).

The investor must then create a well informed background of the company’s position in the market, as it is important to invest in a business that has products or services, which have greater market demand (“eHow Personal Finance Editor,” n. d. ). For instance, if the company is making exceptional products and rendering superb services, with higher market patronage, the tendency of investing in this stock would mean greater profit for the investor, since there are large amount of people who wants more of its product or services that render loads of profit for the company (“eHow Personal Finance Editor,” n. d. ).

Lastly, examining the monetary edge and strength of two or more companies to invest with is a part of the fundamentals of investing in the stock market. Going down through the balance sheets would determine the likeliness of the companies, which have the greatest potential to choose for the stock investment with greater return of profits for the investor (“eHow Personal Finance Editor,” n. d. ). More so, knowing more about the financial stability of companies is as well considered as valuable information for the investors that could be very well helpful in terms of choosing the stock to invest with (“eHow Personal Finance Editor,” n.

d. ). Outlook on the Current Economy The economy today, after the different business fiascos, have led to the crisis that has been experienced particularly by the US and other related countries. The impact of the financial scandals of the different key players in the stock market has led people to reconsider the investments that has been made into stocks and led to the decline in the progress initially made before the different issues that have risen because of wrongful decisions and fraudulent behavior.

With the new presidency, there are the related expectations that the economy will be better after gaining a better level of confidence in terms of the capability of businesses to gain their strength in the financial market. More so, the expected increase in the performance of the economy would lead the stocks to have more value and have its respective impact on the performance of the stock market. Major Factors that Affect the Behavior of Stock Market Most of the people may have common interest in knowing the particular reasons and factors as to why the stock market behavior goes up and down.

In simple thoughts, these fluctuations in stock market could possibly regarded as normal reactions according to the performance businesses in whether the companies are making money and losing in their overall profit. Thus, if a given company is performing exceptionally well and is making tremendous amount of money or profit, it can affect the stock market in such a way that there stock value increases with more and more willing investors that are all willing to invest their money in buying the company’s growing stocks. More so, there are various factors and reasons that affect the value and behavior of stock market.

One of this is the aspect of interest rate and/or how much interest the bank could give the investors to keep their huge deposit in the bank. With this notion, if the interest rate of banks is high, it is more likely the prices of stock market to go down. This is mainly because inventors no longer seek or consider the risk of investing in the stock market when they could actually make decent amount of money in keeping their deposits in the bank and through the higher interest rate. The condition of the economy, the season, and the popularity of a particular product has a corresponding impact on the stock market.

If the availability of the money in the market is high, which means there is an abundant supply of money in the market, there is the greater tendency that this brings in more money to the companies and that the prices of these stocks would increase. Conversely, the opposite also becomes true when the level of money supply is low. The time of the year would also determine whether or not the stock would be high where the products or services rendered by the company selling the stock would only have a specific time in the year where they are deemed necessary.

For example, it is not all year round that Christmas decorations are needed so the prices for the stocks of companies which deal with seasonal, which in this case is Christmas, would only depend on the demand of the people during that particular time of the year. On the other hand, the stock prices for companies who produce something which is needed all-year round would be higher. For example, the prices of stocks for oil companies would be relatively higher and would not vary in anytime of the year because the demand is continuous.

There are other factors which affect its prices and are outside the realm of seasons. Lastly, the publicity or the image of the company would also affect their ability to sell their stocks at a higher price. For example, an insurance company fails to adhere to the standards of transparency and is accused of deceiving their clients because of unpaid premiums. Thus, there would be a greater tendency that people would lose their trust in the company and they would have to pull out their investments for the purpose of transferring it to other companies which has a more stable and sturdy reputation.

There is also the fear of companies losing in terms of profit and filing for a bankruptcy once it loses it clients due to a bad reputation. With the lower demand from clients and a decreased potential for attracting more customers, there is the greater likelihood for the investors to refrain from taking chances on the stocks of this company and find better alternatives where they can invest their money in. Benefits of Using Online Financial Tools

Definitely, the field of business is among the areas which have been touched upon by the advancements in information and communication technology. There are different modern technologies that allow for the rapid transfer of information from one side of the world to another without the added costs due to the time differences and the geographic barriers. Among the tools which are made available to investors that will enhance their investing activities are the online financial tools such as Yahoo! Finance and Investopedia simulations which allow for the investors to do several tasks online.

These online financial tools allow the investors to be able to track the daily quotes of the different stocks available in the stock market especially those areas which require further evaluation (Paulson & Huber, 2000). There are different means to get this kind of information but the availability of the said data in the internet allows the investors and other business professionals to readily see the data whether they are at their homes, in the office, or in travel with a simple click in their computers.

The Internet has enhanced the interface where the prices are shown and there are even websites which are meant to be user-friendly. In addition to this, the online financial tools also allow for the users to process data for analysis (Rasmussen, Goldy, & Solli, 2002). The number of investors who are relying on the internet to be able to manage their stocks is also increasing (Khosrowpour, 2000) More so, the availability of the data of stocks in the Internet has given the ordinary people the chance to have access to these also (Cagan & O’Connell 2005).

Therefore, the people who are planning to invest are given the chance to observe the behavior of the stocks and be able to decide where they would want to put their money in without having to take the risk on uninformed investments. The Internet has actually given the chance to ordinary entities, individual or organizations alike to produce the data they need and have access even to the analysis of the different aspects of investing in stocks (Cagan & O’Connell, 2005). In relation to this, the students studying business, finance, and other related courses could easily study the practical side of stocks.

The students and the people from the finance and business courses in the academe are given the chance to be spectators in the different happenings in the stock market and they are even allowed to learn from the experiences of the different players of the stock market whether these may be in the form of failures or successes. While this may not give the assurance that these students would be able to become expert investors, they would have the chance to get a preview of the practical side of investing and learn from what has happened in the past to get through the intricacies of stock investments.

Lastly, there are important and related information which are contained in the online financial tools which include the discussions of the different people from all over the world regarding the stock prices. Moreover, there are news and advisories given which are also related to the investment of stock prices that lead the investors to have a better view of the stocks aside from the numbers which are presented to them in the form of prices.

To a certain extent, the discussions and the news presented in the websites of the online financial tools allow for interaction and information to be presented, especially the analysis of the stocks and the vulnerabilities of the market in the future. These are the perceived advantages of using online financial tools. There are more innovations which are meant to enhance the usability of these and are expected to come to the investors in the near future. However, the security and the privacy of information remain to be a consideration for the online investors.

There are still remaining loopholes in the security aspect of the online financial tools and improvements are expected on this side. Company and Stock Analysis There are different private organizations whose stock and company experience has become important in the analysis of such. The companies which will be reviewed here include Walmart Stores, Arcelormittal, Suncor Energy, Dell, Johnson & Johnson, Pfizer, Apple , Comcast, PF Changs China Bistro. Walmart has a reputation in the USA which has become problematic because of the perceived lack of sensitivity of the company in adhering to fair and appropriate business practices (Reuters, 2008).

The company shows that there have been increase in their sales and they do not believe that they are losing money despite the blatant reputation crisis that has hit the company. Nonetheless, its stock shows to be pretty strong with an annual range of 46. 25 to 63. 85 (Wal-Mart Stores, Inc. , n. d. ). ArcelorMittal is a producer of steel with a wide array of different products which are meant for the use of different consumers. The stocks of this particular company in the US have been considered to be quite low compared to that of the first company considered.

There is a considerable inactivity when it comes to the trading and the update of quotes available online. Nonetheless, there is a very wide range found for the value of the stocks for this product. Upon evaluation of Suncor Energy, Inc. , a sustainable energy company, it is found that the range for the price of its stock over the year is quite wide which shows that the lowest value of its stock has dropped very low in a particular time of the year. As of the present, the stock price is in the middle.

In consideration of the range and the current price, this stock is vulnerable for changes in its price over the year. As for Dell, Inc. , the prices of its stock is performing well in the stock prices but remains at a relatively low price. The range of the value of the stocks also poses a positive performance as it does not go towards far ends of the pole. More so, with the company being rested on the electronic field means that there is a greater chance for them to get through the crisis because of the inevitable demand for electronic products that are made available today in the market.

Johnson & Johnson, as one of the leading companies that manufactures and market quality healthcare products around the globe, has recently recorded one of its worst stock performance as compared to the previous quarter that the company had. JNJ has recorded numerous drops in figures with the company revenue falling of about 7% from $15. 47 billion to $15 billion and the net income fell from $3. 6 billion to $3. 5 billion. Sales for JNJ, on the other hand, have also dropped with consumer sales decreases from $4. 96 billion to $3. 71 billion, more especially with the prescription drug sales recording slump from $6.

43 billion to $5. 78 billion. This enormous changes and alarming drop in JNJ sales is said to have originated from the problems in company supply and issues that directly concerns of the safety of some other drugs that the company have and manufactures. Nonetheless, JNJ, though experiencing drop in sales, still remains as a sturdy (Johnson & Johnson Sales Fall, 2009). For Pfizer, Inc. , the prices of the stock is pretty much stable and is a safe investment for those who desire to have their investments safe from the vulnerabilities of the market. The 52-week range of this particular stock has remained between 11.

62 and 20. 29 without much change in the values that has become quite shocking (Pfizer, Inc. , n. d. ). In contrast, Apple, Inc. , has experienced erratic changes in the prices with a wide range of prices in a p of 52 weeks. The big difference between the low and the high values in the range shows that there is the tendency for the stocks to go down at a very low point or go up to a considerable average. For the investors who are seeking for greater profits, it is wise to observe the behavior of the stocks first before investing as it is quite a risky decision to do it with this company.

Another company which has a relatively stable stock price is that of Comcast Corp. where the range of prices has remained at 47. 850 to 72. 150 (Comcast Corp. Cl. A. , n. d. ). However, trade of this stock is not active as compared to that of the other companies which have been previously reviewed. Lastly, the stocks for P. F. Chang’s China Bistro, Inc. have plummeted to a low value and are observed to be quite low for the presented trading days. The range, however, is quite big but is not threatening for investors yet.

However, the relatively low market capacity shows that this stock is yet to improve and has not been able to encourage or open itself fully to stock players.


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