The stock market is a collection of markets where the trading and issuing of equities and other sorts of securities takes place. The stock market is one of the most important tools of a free-market economy, as it provides companies with access to capital in exchange for giving a fraction of ownership to investors.
The stock market works in two ways; firstly new shares are issued through Initial Public Offerings. Secondly, the shares of registered companies are traded by investors. The trading of shares does not bring any money to the company, though.
The Stock Market might be a free market; however, it is regulated by the Federal Government and is not rigged. Investors trade stocks of registered companies based on the information available on the market. This information can be related to the country’s politics and economy, the company’s current activities and future plans or the impact of a competitor’s activities.
ABOUT THE REPORT
In order to gain a clear understanding of a country’s stock market and, the probability of earning profit or loss, it is advised to study the analysis reports of it. Such analysis reports give a clear picture of where the market stands.
In this report I have done a comparative analysis of the performances of a few companies listed on the stock market. These companies are considered the market leaders; listed on Nasdaq and NYSE, are some of the largest companies in the United States of America with market capitalization going in billions of dollars.
COMPARATIVE ANALYSIS OF COMPANIES LISTED ON STOCK MARKET
The companies I have picked are Target Corporation, Google, T-Mobile, Wal-Mart and Starbucks Corporation. All of them have hundreds of investors who have invested large amounts of money; in case of any profit or loss they are all affected.
Analyzing these companies will give me a clear picture of where the U.S stock market stands. Besides, it will also show me which company is performing better and should be invested it. I am also going to discuss the impacts of various events that may have an impact on the performance of a company’s stock.
Below is a table that shows which company’s stock prices changed the most during a week, this chart gives stock prices from June 19, 2017 up till September 8, 2017;
|DATE||Wk Open||Wk Close||Wk Open||Wk Close||Wk Open||Wk Close||Wk Open||Wk Close||Wk Open||Wk Close||Sig. Stock|
|Jul 3-Jul 7||912.2||918.59||60.74||60.01||75.84||75.33||58.9||58.04||52.53||51.07|
|Jul 17-Jul 21||957||972.92||61.04||62.58||76.29||76.15||58.73||57.98||53.23||54.84|
|Jul 24-Jul 28||972.2||941.53||62.39||61.78||76.03||79.81||58||54||54.65||56.11|
|Jul 31-Aug 4||941.9||927.96||62.25||64.52||79.82||80.48||54.48||55.44||56.34||57.58|
TABLE 1: WEEKLY OPENING AND CLOSING STOCK PRICES
DISCUSSION ON WEEKLY STOCK PRICE CHANGES
In the previous section there is a table which shows opening stock prices of every Monday morning and closing prices of every Friday evening. The table lists data from Jun 19, 2017 to September 8, 2017.
- The table shows all companies’ stock prices changed during the week; however, Google witnessed significant changes in its prices. An analysis of Google’s volatility shows that the stock is very volatile; with a beta of 0.98. Such a high volatility means that the stock is significantly risky. Though, as the saying goes by; the higher the risk the higher the return (Investopedia, 2017).
High volatility of the Google stock and the chances of earning a high return has made the stock a lucrative option for traders; hence, the high volume of day traders. Though, the exceptionally impressive performance of Google Inc. also counts as a reason for the good performance of the stock.
- Other companies’ performance indicators show a totally different story. Companies like T-Mobile have a beta of 0.23 with low share prices. This shows that the company’s image in the eyes of the traders is not so good. Probably, because the company is facing scrutiny over its employee’s working conditions (“One Reason Why T-Mobile (TMUS) Stock Is Down Today – TheStreet,” n.d.).
There is also news that the company is facing tough business. Quite recently it has come to my knowledge that Sprint Corp.; an American telecommunications company, might have pushed back a possible deal with T-Mobile (“T-Mobile Gets a Surprise From Sprint, and Now Its Stock Is Falling – TheStreet,” n.d.). It seems that these news have had an adverse effect on the company’s stock and currently the investors are only interested in selling it.
- Financial reports show that Wal-Mart has a beta of 0.05, which is way lower than other stocks. Such a low beta will discourage investors from buying it and will be a strong sell.
Recent news report, Amazon’s intentions of acquiring Whole Foods Market, this means that Wal-Mart’s status of having Every Day Low Prices might soon be snatched away from it. And as Amazon enters the grocery business there is expected to be tough competition in the near future; among the two retail giants (“Why Shares of Wal-Mart Stores Are down Today — The Motley Fool,” n.d.).
- Starbuck’s beta shows a moderate value, at 0.64. Maybe the market has responded to the latest news of Starbucks introducing its Pumpkin Spiced Latte (“Pumpkin Spice Glut Arrives Earlier Than Ever – The New York Times,” n.d.). It might also mean that the market has not responded at all and the stock might be good for a long term investment.
- As far as Target is concerned, shares have underperformed this year because of strict competition from other giants like Wal-Mart and Amazon (“Target has a ‘viable’ strategy to compete with Amazon: Analyst,” n.d.). This competition has very severely affected Target’s shares. However, market gurus claim that we might soon hear good news.(“Target Corporation (TGT) Stock Finally Shows a Glimmer of Promise,” 2017)
Looking at the information above, it is quite evident that the one stock that can give us significant return through trading is that of Google. It is a highly volatile and risky stock but then, there is this saying; higher the risk, higher the return.
Other stocks are not so lucrative for trading. However, stocks of Starbucks are moderately volatile and might be good for long term investment; especially for those who are in it for dividends.
Investopedia. (2017, September 6). Is Google a Good Investment? Retrieved September 12, 2017, from http://www.investopedia.com/investing/google-good-investment/
One Reason Why T-Mobile (TMUS) Stock is Down Today – TheStreet. (n.d.). Retrieved September 12, 2017, from https://www.thestreet.com/story/13415912/1/one-reason-why-t-mobile-tmus-stock-is-down-today.html
Pumpkin Spice Glut Arrives Earlier Than Ever – The New York Times. (n.d.). Retrieved September 12, 2017, from https://www.nytimes.com/2017/08/30/business/pumpkin-spice.html?rref=collection%2Ftimestopic%2FStarbucks%20Corporation&action=click&contentCollection=business®ion=stream&module=stream_unit&version=latest&contentPlacement=1&pgtype=collection
Target Corporation (TGT) Stock Finally Shows a Glimmer of Promise. (2017, August 16). Retrieved September 12, 2017, from https://investorplace.com/2017/08/target-corporation-tgt-stock-q2-earnings/
Target has a ‘viable’ strategy to compete with Amazon: Analyst. (n.d.). Retrieved September 12, 2017, from https://www.cnbc.com/2017/08/17/buy-target-because-it-has-a-viable-strategy-to-compete-with-amazon-analyst.html
T-Mobile Gets a Surprise From Sprint and Now Its Stock Is Falling – TheStreet. (n.d.). Retrieved September 12, 2017, from https://www.thestreet.com/story/14198033/1/deutsche-telekom-shares-slump-after-reports-suggest-t-mobile-merger-talks-on-ice.html
Why Shares of Wal-Mart Stores Are Down Today — The Motley Fool. (n.d.). Retrieved September 12, 2017, from https://www.fool.com/investing/2017/06/16/why-shares-of-wal-mart-stores-are-down-today.aspx