LENGTH: 1 -2 hours

TYPE: Individual/Groups

Sophistication Level: Low

Learning Outcomes: Students learn how to:

  • analyze a company
  •  present recommendation for action
  • form an educated opinion on the future performance of a stock 

Instructions: 

This assignment will consist of 1) a written stock pitch, 2) creating a portfolio following your investment recommendation on EquitySim, and 3) a reflection assessing the results.

Your assignment is to make a long (buy) recommendation on a stock that your client will hold for x weeks. In other words, you will write a stock pitch in which you will provide compelling reasons to make a bet that a stock’s price will rise in x weeks. After you’ve decided on your recommendation, buy 100,000 shares of the stock you chose in a new portfolio on EquitySim. By the end of the x weeks, you will write a brief reflection assessing the strength of your recommendation. In the reflection, you should include snapshots of your portfolio’s performance. 

  1. PART 1: WRITE A STOCK PITCH
  1. Summary: 

Write a short paragraph that summarizes your recommendation. You should include a brief description of the company, their business model, a summary of company data (below), what your target price is, and how much profit you expect to make by following your recommendation. Make sure to include these data points:

  • 2 Competitors
  • Current Share Price
  • Your Price Target
  • % Upside (potential profit from following your recommendation)
  • Market Capitalization
  • P/E
  • Annual Historical Share Price Range (last 52 weeks)

     2. Investment Thesis:

Write a paragraph explaining the reasoning behind your recommendation. Think about what you know that the market doesn't. In other words, why is the market wrong about your particular view? Below are some examples that you can use to guide your thinking. 

  • Valuation: you think the company is undervalued. 
  • Why do you think the company is valued incorrectly? 
  • Quality at a reasonable price: you think the company will consistently grow over time.
  • What makes you think the company is positioned to grow in the long term?
  • Growth: you think there are certain events (catalysts) that will result in significant price change or revisions.
  • What catalysts do you think will lead to price momentum?

   3. Risks:

Write a paragraph outlining the risks of following your investment recommendation and how things could go differently from what you’ve predicted. In other words, what could go wrong?  

    2. PART 2: CREATE A PORTFOLIO

Create a portfolio on the EquitySim website where you will buy 100,000 shares of the stock you’ve chosen. In other words, you will create a portfolio that follows your recommendation. 

After you’ve created your portfolio, make sure to take a snapshot of your initial portfolio value and holdings table. 

    3. PART 3: REFLECT

After x weeks, write a reflection assessing your portfolio’s performance. Make sure to include a snapshot of your portfolio performance graph, your holdings table, and any other relevant data you’d like to highlight. Make sure to address the following questions in your reflection: How much profit (or loss) did you make as a result of your recommendation? Did the catalysts play out as you predicted? Did you overestimate or underestimate the risks? Were there any unexpected events that affected your performance? Was there anything you failed to consider? What were you right about? What were you wrong about?

Deliverables: 

  1. Stock pitch document at beginning of exercise.
  2. Reflection at the end of exercise.

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