I choose to Invest in Apple Inc., Wal-Mart Stores Inc., and Yahoo! Inc. The Ticker Symbols for Apple Inc., Wal-Mart Stores Inc., and Yahoo! Inc. are AAPL, WMT, and YHOO respectively. As of January 22, 2016 for AAPL stock price rose by 5.12% to close at $101.42, WMT rose by 1.31% to close at $62.69, while YHOO rose by 1.50% to close at $29.70 (Morning Star). I decided to purchase 100 shares of each company bringing my total investment to $19,386 ($101.42 x 100+ $62.69 x100 +$29.75 x 100.
I choose Apple Inc. because I love their products and it is the world most profitable company. I choose Wal-Mart Stores Inc. because it is the largest retailer in the world, with their considerable advantage in retail, Wal-Mart will continue to be profitable giving decent returns to its shareholders (Yahoo Finance). I decided to buy Yahoo because I think that the share is currently undervalued. Analysts estimate Yahoo! Inc. target price to reach $41.67 per share in the next twelve months (Market Watch). Therefore, the current share price of $29.75 gives an opportunity to buy the share at a bargain (Market Watch).
AAPL stock price has declined by 18.97% over the last six months from $126.20 to $101.42 (Yahoo Finance). AAPL shareholders earned a dividend yield of 2.08% and an EPS of $9.22 in the last twelve months (Yahoo Finance). Analysts estimate that AAPL share price to rise to $10.37 over the next twelve months (Market Watch). Analysts are recommending investors to buy AAPL shares because of the strong capital appreciation potential (Market Watch). Apple has a low P/E ratio of about 10 times to earnings as compared to some of its competitors such as Facebook Inc. that has a P/E ratio of about 95 times to earnings making Apple an ideal value stock (Market Watch).
Over the last six months, WMT stock fell by 13.54% from $72.53 to $62.69 (Yahoo Finance). In November 2015, WMT posted the lowest closing price of $56.42 (Yahoo Finance). WMT shareholders earned a dividend yield of 1.96% and an EPS of $4.67 in the last twelve months (Yahoo Finance). Analyst estimate that WMT stock price will rise slightly to $63.75 from the current price of $62.69 over the next twelve months (Market Watch). Analysts recommend investors to hold on to WMT stock expecting the stock to show improved performance in the future after closing 295 stores that were unprofitable (Market Watch). In addition, reduction in oil prices will increase the bulk of Wal-Mart customers’ disposable incomes and analysts expect sales to rise while distribution costs will reduce (Market Watch).
Over the last six months YHOO stock price declined by 24.13% from $39.30 to $29.75 (Yahoo Finance). YHOO shareholders earned an EPS of $0.25 in the last twelve months. However, YHOO did not declare any dividends over the period. Analysts are recommending investors to buy the stock with expectations of improved performance due to its strong revenue streams (Motley Fool). However, Yahoo is facing increasing pressure from investors, in particular, from Activist investor Starboard Value LP who are pressurizing Yahoo to make changes in the management and the board and to either restructure or spin-off the core business (Market Watch).
Works Cited
"Apple Inc." AAPL Stock Performance of Total and Trailing Returns. Morning Star, 22 Jan.
2016. Web. 25 Jan. 2016.
"The Motley Fool." The Motley Fool. Motley Fool, 22 Jan. 2016. Web. 25 Jan. 2016.
"Yahoo! Inc." YHOO Analyst Estimates. Market Watch, 22 Jan. 2016. Web. 25 Jan. 2016.
"YHOO Interactive Stock Chart | Yahoo! Inc. Stock - Yahoo! Finance." YHOO Interactive Stock Chart | Yahoo! Inc. Stock - Yahoo! Finance. Yahoo Finance, 22 Jan. 2016. Web. 25 Jan. 2016.
