I asked Mr. Homan, if there is a specific procedure when he invests in shares. I explicitly mentioned I am looking at short term investments. Mr. Homan, first of all mentioned that it is vital to make a fundamental analysis of a company. To successfully do this, it is important to look at:
a) The business model of the company
b) Certain macro-economic trends in the markets other investor do not notice
c) New technologies developing, that will potentially lower the cost of production
If, you carefully analyze above named points, it is important to check whether you are not paying too much for a certain stock. To find this out, Bob Homan typically looks at the price to earnings ratio (PE) of a company, a ratio that was explained above. If, you
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Broker report: Unilever
As Mr. Homan advised first of all it is important to look at the business model of the company. Unilever is a multinational corporation selling consumer goods including foods, beverages, cleaning agents and personal care products . Unilever is a dual listed company consisting of Unilever NV in Rotterdam and Unilever PLC in London.
First look at the business model of Unilever, the first point on the checklist of Bob Homan. The company owns more than 400 brands including 11 "billion dollar brands", which each achieve annual sales in excess of €1 billion . Thus, it is a large firm, that is not only located in the Netherlands, but is active at markets globally. Unilever mainly sells food and beverages. Food and beverage companies are usually pretty stable, because everyone still needs to eat. Nevertheless, it is also important to keep an eye on macro-economic trends and new technologies, points two and three on the checklist. If, there is a recession, people tend to buy less expensive food instead of the more expensive brands of Unilever, like Knorr, Magnum or Lipton Ice Tea. Since Unilever is also active in the space of diet products, new technologies in losing weight might hurt Unilever is this big and profitable market. On top of the three points on the checklist, it is important to read and analyze the
J Sainsbury's aims and objectives Their business is now focused very much on Sainsbury’s Supermarkets and Sainsbury’s Bank following the sale of Shaw’s
A comparison of the PE Ratio for these three companies shows a great deal about how investors view Royal Gold Inc. in comparison to competitors in the industry. All three companies have had ups and downs over the past three years yet Royal Gold has remained fairly solid. The prospect of strong growth appears to nearly double the PE Ratio from 2004 to 2005 for Royal Gold and Newmont Mining Corp.
“If you live in a free market and a free society, shouldn’t you have the right to know what you’re buying? It’s shocking that we don’t and it’s shocking how much is kept from us” (Kenner). For years, the American public has been in the dark about the conditions under which the meat on their plate was produced. The movie, Food Inc. uncovers the harsh truths about the food industry. This shows that muckraking is still an effective means of creating change as shown by Robert Kenner’s movie, Food Inc. and the reforms to the food industry that followed its release.
Social attitudes of today’s society have changed the way people live, people now are working longer hours to sustain the financial demand that is needed in-order to keep up a higher standard of living, “One quarter of working men and 11% of working women in the UK now work more than 50 hours per week” . This is a social problem because it encourages people to eat ‘fast food’ type products such as pasties, sausage rolls, pre-packaged sandwiches and microwavable take-away items such as burgers & hot dogs etc, which all have high percentages of saturated fats, sugars and salts. These ‘fast foods’ are eaten because of their convenience and due to time shortages from working longer hours these food are the easy option. This implicates less healthy diets and obesity in the UK population. Tesco’s have and still currently sell these items but to combat this problem in 2000 Tesco launched their ‘Healthy Living’ brand of foods which are lower in fat, no added sugar and low in sodium, and in 2004 launched their ‘Healthy Living Club’, which has over 350, 000 members and offer over 500 ‘Healthy Living’ Products. The club offers customers information on diets, weight loss and other health issues.
Mutual-fund managers generally rely on some variation of the two classic schools of stock analysis: fundamental and technical. Fundamental analysis relies on information such as economic supply and demand, and the company's financial health. These investors use information such as annual growth rate, earnings records, and key ratios to make decisions and focus on consistent, steady growth. Alternatively, technical analysis focuses more on the study of timing, price fluxuation, and investor sentiment. A common method of technical analysis is the usage of a chart of the stock’s price history to predict market sentiment and stock price trends.
Over the years, Tesco has recorded growth which has been achieved through different strategies. The company has adopted its growth strategy which has been implemented in four different parts. One has been emphasis on the growth of Core UK business in order to expand internationally. This growth has allowed that company to position itself in food and nonfood sectors based on retailing services. Over the years, the company has witnessed financial fortunes which have been reflected in its growing sales.
The food and staples retailing is an increasingly competitive industry. The market giants (competitors) are Coles (owned by Wesfarmers) which has 741 stores across Australia and plans to add 70 m...
Kraft Food Group has some areas in which it can grow. The company needs to fix its debt-to-assets and debt-to-equity ratios. The profit margin has been sporadic for the last five years. This is not a good trend for the company. This industry has some very external factors that can devastate the profit margin such as drought and other Asian market trends that can hurt the bottom line for this industry and company. Weather cannot be controlled. This company has a lot of different products which can be good by not putting all of your eggs in one basket approach. This can also lead the company to be stretched and pulled into many directions. The food industry can be a very up and down market because of external forces. Kraft Food Group has some problems with putting chemicals in some of their products that are now prohibited by the government. Kraft Food Group has food scientists, engineers and chemists to combat these chemicals and to develop new products and provide consistent quality of products so they can grow through sales and profits. Kraft Food Group has a high standard of quality and respect from its customers. Kraft Food Group could lose financially by food contamination. This company will continue to grow in the future if they continue to make improvements, make investments, and produce quality
"If the country is a good place to live in, why not work in it?"
Strategic management is the way of implementing different business strategies and plans to attain certain specific aims and objectives. It involves collection of decisions and different rules and policies that tend to define the results that are generated in the form of better business performance. For undertaking these activities, management should possess an in depth understanding and be able to assess the general and competitive external and internal business environment to take proper business decisions (Cornelis, 2010). McDonalds is an organization that offers a range of products and services in a very effective manner that makes it a market leader in providing fast food services all over the world. By enforcing suitable strategies, McDonalds can increase its level of sales and will also help in upgrading as well as sustaining the market by acquiring competitive advantage (Schoenberg, Collier and Bowman, 2013).
The case looks at prescriptive strategy as applied to multi-product group of companies. Unilever is based in over a hundred countries where multiple products are being made in each. However, the market is mature which means that growth is stagnant and innovation is almost non-existent. In order to improve on growth and sales, the strategies that are needed look at how to come up with new products that have high profit margins and penetrate new markets. The prescriptive approach was used to come with a strategy to improve growth and profit. In order to improve on innovation, both the prescriptive and emergent strategies can be used since both support innovation. From the case study, not much profit was made when the ‘Path to Growth’ strategy was first implemented (2001-2004). The strategy was initially based on cost cutting. There was a need to also build volumes through existing portfolio of branded products through innovation and marketing. By focusing on increasing sales in developing countries where growth prospects were high and increasing investment in personal care products where profit margins were higher, it was possible to improve the profit portfolio.
Unilever is a multinational company which ranks third globally in fast moving consumer goods. They have an excellent value chain which is one of the factors that has resulted in them to be among top consumer goods company globally. Their merger and acquisitions have led them to expand their company in different sectors of the consumer goods. They have 400 brands and sell their products across 190 countries. They have to work on some areas of the value chain to work even better than how they are working now. Also, there are many opportunities that will help Unilever to overcome their shortcomings and make them a successful Consumer goods
Unilever is one of the largest packaged consumer goods companies specializing in hundreds of different brands. Unilever is based in Holland and the UK and is jointly owned by Unilever N.V and Unilever PLC. Both companies have the same board of directors but operate as a single entity and list there stock separately. In 2000, Unilever restructured their board of directors by electing new faces to the board and seeing other key members retire, like Jan Peelen and Robert Philips.
There is a sense of complexity today that has led many to believe the individual investor has little chance of competing with professional brokers and investment firms. However, Malkiel states this is a major misconception as he explains in his book “A Random Walk Down Wall Street”. What does a random walk mean? The random walk means in terms of the stock market that, “short term changes in stock prices cannot be predicted”. So how does a rational investor determine which stocks to purchase to maximize returns? Chapter 1 begins by defining and determining the difference in investing and speculating. Investing defined by Malkiel is the method of “purchasing assets to gain profit in the form of reasonably predictable income or appreciation over the long term”. Speculating in a sense is predicting, but without sufficient data to support any kind of conclusion. What is investing? Investing in its simplest form is the expectation to receive greater value in the future than you have today by saving income rather than spending. For example a savings account will earn a particular interest rate as will a corporate bond. Investment returns therefore depend on the allocation of funds and future events. Traditionally there have been two approaches used by the investment community to determine asset valuation: “the firm-foundation theory” and the “castle in the air theory”. The firm foundation theory argues that each investment instrument has something called intrinsic value, which can be determined analyzing securities present conditions and future growth. The basis of this theory is to buy securities when they are temporarily undervalued and sell them when they are temporarily overvalued in comparison to there intrinsic value One of the main variables used in this theory is dividend income. A stocks intrinsic value is said to be “equal to the present value of all its future dividends”. This is done using a method called discounting. Another variable to consider is the growth rate of the dividends. The greater the growth rate the more valuable the stock. However it is difficult to determine how long growth rates will last. Other factors are risk and interest rates, which will be discussed later. Warren Buffet, the great investor of our time, used this technique in making his fortune.
Unilever is a multinational consumer goods company, which includes products like food, beverages, cleaning agents and personal care products. Unilever is the world third largest customer goods company. The brands of Unilever are trustworthy worldwide and because of the feedbacks given by the people, Unilever is stated as one of the most successful customer goods/products companies. Unilever have more than 400 brands which focuses on health and wellbeing, and this is the reason why Unilever has touched so many people lives in many different ways. Unilever collection of varieties varies from nutritionally composed foods to permissive ice creams, inexpensive soaps, comfortable shampoos and everyday domestic care products and goods. Unilever also produces world-leading brands such as Lipton, Knorr, Dove soap, Axe, Blue Band and many more. Unilever is a responsible business as their supportable living strategy sets out to decouple their development from their environmental influence, and at the same time growing their social encouraging influence as well. Their plan has three main aims to achieve by 2020 which are as follows: