Introduction
Computer industry stock
Apple Vs. Dell
Done By
Ebtihal Al-Arbash
Mada Khudaier Al-Enizi
Roba Algothmi
The goal of any investor is to choose the profitable stock to make sure that
their money is in the right place. The more want able and attractable stock are the one
who has high return with less rate of risk. Evaluating the profitable stock needs for
more accurate and efficient information about the stability of the company and the
history of it. Peter Lynch always says you should buy what you know. But actually
the people are more likely to buy the most popular stock even though they don't have
much information about it. Involving in stock market require more clever decision
based on real knowledge of the stocks and the ways to calculate the return, risk and
compare to the other similar companies.
In the past five year the computer and technology sector has become one of
the profitable industries to invest in. According to Zacks Investment Research firms
the most profitable sector in 2011 was computer and technology sector. "The
computer and technology sector was expected to see an incredible 16.3% net profit
margin in 2011, up from 15.3% in 2010. That means for every $1 in revenue,
companies keep an average of 16.3 cents after-tax. That's nearly twice the average of
the S&P 500. Moreover, revenues are expected to grow 10.7% in the sector, leading
to net income growth of 18.3% in 2011. Valuation is very reasonable too, with the
sector sporting an average P/E of 15.0x 2011 earnings. That's a slight premium to the
S&P multiple of 13.9x, but still well below its historical average (Bunton, 2011)".
Inventory turnover is “the number of times on average the inventory is sold
during the period”. This ratio measures the liquidity of the inventory and is calculated
by the equation cost of goods sold/average inventory = inventory turnover.
A measure of how often the company sells and replaces its inventory is the
ratio of annual cost of sales to the latest inventory. One can also interpret the ratio as
the time to which inventory is held. For example a ratio of 26 implies that inventory is
held, on average, for two weeks (365 days in a year divided by inventory turnover
ratio of 26 equals 14 days per 2 weeks average inventory holding period). It is best to
use this ratio to compare companies within an industry (high turnover is a good sign)
because there are huge differences in this ratio across industries.
Inventory turnover
Year
Dell
Apple
2008
31.2
36
2009
46
49
2010
49
56
2011
34
68.5
2012
31.2
107.9
Apple is the best than dell.
Research Question:
Which companies of computers industry are more profitable in the market?
Research Method:
The project will be conducted by gathering information from soft resources like the
companies official website and some articles related to the stock market. Also, the
opinion of some of the investors will gather through survey distributed among them.
Another method is founded information from library resources such as books journals.
What drives a stock's value? Many factors come into play, including how much profit
the company earns, how its products fare in the market place, and the overall state of
the company. But what matter most is what investors believe about the company's
future.
This book is talk about the method of evaluating the stock in the market and
explain the factors that drive the value of stock. The value of share is a function of its
future returns. To predict the value of company stock in future must have an overview
of the sales and profit of it. This would done by assuming that the historical trend will
continue as its behavior. One way to know the profit of particular company is
common size income statement. Also, predicting the value of the stock is considering
how effective "the impact of the new product introduction on the market which will
have an average ,approximately 5% abnormal return". The condition of the company
is having enormous effect on the stock, it have to be concern with economic indicator
such as GDP, unemployment, and inflation, these indicators will determine the rate of
return an investor will obtain from investment on stock. "in order to trade profitably
and to be able to interpret corrective in the current state of economy, it is essential to
understand the effect of economic indicators on stock market. What's more, it will
help investors make wise and informed decision on whether or not to invest in the
companies they are interested."
Another source are Yahoo finance website which show the current information
about the stock market which give the research the accurate information to evaluate
which stock are much stable and profitable. Lot of the information that provided in
this website are dependable and uses by lots of investors. It also provide and average
of the past year performance of the stocks.
The links was useful to me in giving the knowledge that I needed. And give me
background of the two companies. Also, the link make me aware of new products for
the two companies. Like, A measure of how often the company sells and replaces its
inventory and also This ratio measures the liquidity of the inventory and is calculated
by the equation cost of goods sold/average inventory = inventory turnover.
In 2011 todd bunton wrote his expectation in an article in zacks investment
research website and the article was about The Most Profitable Sector in 2011. Todd
Bunton was expecting the computer sector to be the most profitable sector to invest in
,he based his expectation on a lot of research and that research was proofing that the
computer industry is growing really fast and a lot of people willing to invest in that
sector because it going to be the most profitable sector that anyone want to invest in. (
Bunton, 2011)
The most lucrative business ideas that one can start in this year 2012 is
Investing in the computer industry. Kenya seed if there is someone wont to make a lot
of profit in easy way and in short time so what you need is Investing in the technology
sector. The resone behind that is because nowadays nobody can life without
technology and al the company and governmental department can't get rid of the
technology because it makes everything easy and fast .due to that technology industry
become one of the most profitable sector in those days and it will be a lot profitable in
the future. (Kenya, 2012)
References:
1. Bunton, T. ( 2011, April 11). 4 stocks from the most profitable sector.
Retrieved from http://www.zacks.com/commentary/17495/4-stocks-from-themost-profitable-sector
2. Dell Computer Systems and Services." Dell Computer Systems and Services.
N.p., n.d. Web. 28 Nov. 2012. <http://www.powerfulwords.co.uk/sampleassignments/marketing/dell-computer-systems-and-services.php>.
3.
Kenya. (2012). lucrative business ideas to start. Retrieved from
http://kenyaentrepreneur.hubpages.com/hub/Lucrative-And-ProfitableBusiness-Ideas-To-Start