Investment Analysis

Write a report on the Investment position of your chosen Company.

Finance is a department which deals in the investments study. It contains the assets and liabilities dynamics over the time under little condition of risks and uncertainties. It is basically a part of science which manages the money of the investors. Finance study makes it easier for an organization to evaluate the financial performance and the stock position of an organization. This process makes it simple for the investors and the financial analyst to judge the stock of an organization.

In the report, investment position of Apple Inc has been evaluated on the basis of stock price of the company of last 2 years and the index price of last 2 years. The investment position of the company has been evaluated through identifying the average monthly return of the company, standard deviation of the company, dividends of the company, relationship among the market index and company and lastly, the characteristics line of apple inc stock.

The main objective of this report is to identify that whether the stock price of the company is competitive or not. Further, the report has been prepared to measure the safety of the investor’s return and evaluate the total associated risk with the stock price of the company. The report also explains that how much investment could be got by the company against the investment into the equity stock of the company. The objective of the report is to measure the total risk and return of the stock and make a decision that whether the investment should be done by the company in particular company or not.

Apple Inc is a technology company which is mainly based in America. The company is operating its business at international level and headquarter of the company is in California, America. The company has been founded in 1976 by 3 founders which are Steve Jobs, Steve Wozniak and Ronald Wayne. The main products of the company are iPod, iphone, Macintosh, Apple watch, apple TV, iLife, iWork, iOS etc. the company is trading in NASDAQ: AAPL, DJIA component, S&P 500 etc. (Home, 2018). The financial performance and non financial performance of the company is quite stunning. Main services of the company are Apple pay, iBook store, Apple store, Mac App store, apple music etc. this is the parent company of various subsidiary companies such as Betas electronics, Apple sales international, Anobit, Apple worldwide video etc. The report evaluated the stocak price of NASDAQ: AAPL to measure the stock performance of the company and the investment position of the company.

Evaluation of Apple Inc Stock

Entire investment evaluation data of the company and the index has been given into the appendix area. Please refer the appendix part.

The above study on the market price of apple inc, movements into the stock price of apple, movement in the stock price of market index, standard deviation of the stock etc explains that whether the investors should invest into the company or not. Firstly, the volatility in the stock price of the company has been evaluated in context with the market index. And it has been found that the average monthly stock price return of Apple Inc is 2.53% in last 2 years whereas the stock price of IXIC is 1.52%. It explains that the stock returns of Apple Inc are way better than IXIC.

Holding period return is the total return which is hold by an asset or the portfolio over a period of time. It is one of the significant tools to measure the investment position and the total return from an investment (Koller, Goedhart and Wessels, 2010). The holding period return of both the securities explain that the changes into the stock price of Apple inc affects the stock price of IXIC as the company is one of the top NASDAQ companies. It explains that the stock price of Apple Inc is quite attractive as the return of the stock price of Apple Inc is higher than the stock price of IXIC and it also explains that the performance of the stock of Apple Inc is better (Madhura, 2011).

Further, the dividends of Apple Inc have also been recognized. Dividends are the total amount which is paid by an organization to its shareholder against the total equity investment (Higgins, 2012).  On the basis of dividend evaluation, it has been found that the dividend yield of the company express that the total dividend of the company has been enhanced by 9.52% in May 11, 2017 from last year. And currently the dividend amount of the company is same from last 1 year. In addition, the risk of the stock of the company has been evaluated. On the basis of the standard deviation calculations, it has been identified that the standards deviation of Apple Inc is 5.183% and the standard deviation of IXIC is 2.51% (Yahoo Finance, 2018).

Further, standard deviation is a measure to identify the dispersion of a particular data on the basis of its mean. It is also calculated as the square root of variances through evaluating and determining the variances among the each point of the mean (Kaplan and Atkinson, 2015). Standard deviation is a statistical measurement which is applied on the holding period return of the company. It explains that the greater the standard deviation o a stock, the greater the variance among the mean and the price (Yahoo finance, 2018).

Dividend Evaluation

The standard deviation result explains that the stock price of the Apple Inc is quite riskier than the stock price of index. However, it has also been recognized that the return of Apple Inc’s stock is also higher (Gibson, 2011). Further, it has been found that the risk level of Apple Inc is higher due to large difference among the mean and the stock price of the company. It explains that the process range of the company is higher and it explains that the stock price of the company could be volatile at any time with huge changes into the stock price (Yahoo Finance, 2018).

Further, it has been found that the characteristics line of the Apple Inc and IXIC explains about the performance of the Apple stock on the basis of IXIC. On the basis of characteristics line of the company, it has been found that the beta of the company is bit higher than the IXIC stock as the price range of the apple stock is higher as well as the volatility level of apple stock is also higher (Hogarth and Makridakis, 2011).

On the basis of the above evaluation on the stock price of apple and market index performance, it has been found that the investor should invest into the stock of apple as the investment would offer the short term (stock average return is higher than the market return) as well as long term return (dividend amount is quite stable and competitive) to the investors of the company (Yahoo finance, 2018). Further, it has been found that the risk level of the company is bit higher than the market index risk because of high price range. But the volatility brief that with the higher risk, the return of the company is also higher.

And thus, it has been recommended to the investors to invest into the stock price of Apple Inc for a longer period to enhance the total return of the investors. However, the short term investment would also offer return to the company. But the level of short term return is lower than the long term investment.

Conclusion:

To conclude, the investment analysis of Apple Inc has been done in the report on the basis of the total return of the company and the associated risk of the company. The investment analysis is a crucial step which makes it easier for the investors to make a better decision about the investment into a particular security. In the report, stock price of apple inc has been evaluated on the basis of IXIC to measure the total holdings return of the company and the standard deviation of the comapny.

The total holdings return of Apple Inc and IXIC explain that the average return of Apple Inc is higher in the market in context with the IXIC stock price. It explains that the investment into the stock of Apple Inc would offer huge return than the industry. However, the associated risk of apple Inc brief that the standard deviation of Apple Inc is 5.18% and the IXIC is 2.51%. It explains that the risk of the Apple Inc is quite higher. On the basis of the study, it has been concluded that with the higher return the investors are always have to bear the higher risk. Though, the investment into the apple stock would be beneficial for the investors as they would be able to get higher returns from the market. The short term investment as well as long term investment into the stock of apple is good option for the investment as in short term, the investor could sold the stock in the market in higher price as well as in longer period, the high dividend could be enjoyed by the investors.

References:

Gibson, C.H., 2011. Financial reporting and analysis. South-Western Cengage Learning.

Higgins, R.C., 2012. Analysis for financial management. McGraw-Hill/Irwin.

Hogarth, R.M. and Makridakis, S., 2011. Forecasting and planning: An evaluation. Management science, 27(2), pp.115-138.

Home. 2018. Apple Inc. (Online). Available at: https://www.apple.com/lae/ (accessed 15/05/2018).

Kaplan, R.S. and Atkinson, A.A., 2015. Advanced management accounting. PHI Learning.

Koller, T., Goedhart, M. and Wessels, D., 2010. Valuation: measuring and managing the value of companies (Vol. 499). john Wiley and sons.

Madura, J., 2011. International financial management. Cengage Learning.

Yahoo finance. 2018. Apple Inc. (Online). Available at:https://finance.yahoo.com/quote/AAPL/history?period1=1462041000&period2=1525026600&interval=1mo&filter=history&frequency=1mo (accessed 15/05/2018).

Yahoo Finance. 2018. IXIC. (Online). Available at:https://finance.yahoo.com/quote/%5EIXIC/history?period1=1462041000&period2=1525026600&interval=1mo&filter=history&frequency=1mo (accessed 15/05/2018).