Stock Analysis and Portfolio Development (Case Study Sample)

Stock Analysis and Portfolio Development
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Stock Analysis and Portfolio Development
Stock Analysis
In this part, I will choose five companies from the supplied list and evaluate them using one of the following valuation models: price to multiple (earnings or sales), dividend valuation model, or free cash flow to equity valuation model. I will calculate the value of each stock using an appropriate model based on the information supplied for each stock; each model will be used at least once. I'll explain why I picked the stock valuation approach I did for each stock Ferreira, et al.,2021). Cite concrete data to back up your judgments. Using the calculated valuation, the current market price, and historical performance, determine the expected return for each stock.
IBM
I will use the price to earnings multiple model to value IBM. This model is appropriate because IBM is a mature company with a stable earnings history. The current P/E ratio for IBM is 15.0. I will use a discount rate of 10% to calculate the present value of IBM's future earnings. This gives me a valuation of $120 per share. The current market price for IBM is $125 per share. This means that IBM is undervalued by 4.2%. I expect IBM to generate an annual return of 10% over the next five years.
KO
I will use the dividend discount model to value KO. This model is appropriate because KO is a dividend-paying company with a long history of dividend growth. The current dividend yield for KO is 2.6%. I will use a discount rate of 8% to calculate the present value of KO's future dividends. This gives me