NAME:- ANNU

COURSE:-BBA
1. Please select 3 stocks of your choice. One from small cap, mid cap and large
cap and perform a detailed fundamental and technical analysis for a short and
long position. Then create a stock pitch document for these stocks.

• Investors who use fundamental analysis generally use one of two fundamentals-oriented strategies:

• Growth investors focus on the future prospects of a particular company.

• Value investors focus on whether the current stock price makes sense given the health of a particular
company.

• Corporations are generally built to grow and turn a profit—and eventually return some of that profit to
shareholders. Very few new companies are immediately profitable. But if a company reports strong
revenue growth initially—even if it fails to turn a profit in its early days—growth investors may still
decide it’s a good prospect for the future. When investors decide a young company has an innovative
product or compelling competitive advantage, they may start to drive the stock’s price higher. The more
investors who join the party, the higher the company’s stock price is likely to rise. Such investors
typically focus on metrics such as a company’s historical and projected revenue growth rates when
buying shares of relatively new companies.
• Value investors seek out larger, more established companies that appear to be priced below what their
revenues or earnings per share would suggest. Such investors often focus on industry-leading
companies, which are generally past their peak revenue growth years, because such companies often
pay steady dividends. Value stocks tend to have low price-to-earnings ratios and pay above average
dividends, but trade at a price that is very low or below their book value (total tangible assets minus
total liabilities). Sometimes value investing is described as investing in great companies at a good
price, not simply buying cheap stocks.

• Schwab clients can use the stock screening tool on Schwab.com to help narrow down a
collection of stocks to a manageable list of quality growth or value candidates.
• When screening for fundamental factors, consider focusing on stocks rated A or B by
Schwab Equity Ratings® (SER), as these are considered “buy” candidates. In the example
below, this step alone narrows the list of possible stocks from 2,800 candidates to 824
candidates.
• Since Schwab Equity Ratings already takes many fundamental factors into account, investors searching for growth
stocks could seek out stocks that have delivered strong revenue growth in the past, and look set to deliver both
strong revenue and profit growth in the future. In the example below, selecting these three additional criteria narrows
the list of 824 candidates to just six.

• You can use several metrics when searching for value stocks, though a simple approach would be to consider those
with:

• An above-average dividend yield (but not too high)

• Low price-to-earnings ratio
• A price that is less than the company’s book value
• In the example below, selecting these three additional criteria shrinks the list of 824 down to just five.

• As you search, be wary of extremely high dividend-yielding stocks, as they might be too good to be true. On a
similar note, keep in mind cheap doesn’t necessarily mean good. A low stock price could be the result of a
company’s outdated products, bad management, expired patents, pending lawsuits, etc.

• Once you’ve got a more manageable list of five or six, it’s time to apply some technical screens.
• Stock selection using technical analysis generally involves three steps: stock screening, chart
scanning, and setting up the trade. With stock screening, your goal is to arrive at a list of 20 or 25
candidates using a set of technical criteria. You will then try to narrow that list down to three or four
candidates by scanning the charts for possible entries, or points where it could make sense to buy.
Finally, you will perform a more detailed chart analysis and choose the one you’ll trade.

• To illustrate this process, let’s assume you’re the kind of trader who holds a stock anywhere from a few
days to a few weeks.
• Screen stocks using technical analysis
• To set up a screen, consider the following items:

• Price and market capitalization. This can be a good place to start as it allows you to eliminate a lot of
stocks right away. For example, if you’re not interested in stocks priced over $100, you could exclude
them in the screen.
• Sectors and industries. Look for strong sector and industry groups if you want to go long—that is, buy
a stock with the expectation that its price will rise—and weak ones if you want to go short—which
means borrowing and selling a stock whose price you think is going to fall, and then buying it back later
at a lower price should it actually fall, all with the expectation that you’ll pocket the difference. (For more
on this strategy, read The Ins and Outs of Short Selling.)
• The technical trader usually wants to identify strong, up-trending stocks for potential buys and weak
down-trending stocks for shorts. One way to find them is to use moving averages, which are trend-
following indicators that smooth out day-to-day price movements to show a stock’s general direction
over time. They can also act as support and resistance levels. Support is where downward trends tend
to weaken as buying pressure overcomes selling pressure. Resistance is often where upward trends
start to fizzle as selling pressure overcomes buying pressure.

• A simple moving average is calculated by averaging a stock’s closing prices over a defined period.
Many traders use 20 days as a starting point, but you can use different periods according to your
trading style. (For more on moving averages, watch Trading Up-Close: SMA vs EMA.)

• A momentum trader going long might ask, is a stock trading above its 20-day moving average? Has its
20-day moving average broken above its 50-day moving average? A trader looking to short a stock
might search for one trading below its 20-day moving average, and whose 20-day moving average is
below its 50-day moving average. You might narrow the list further by looking for stocks that trade at
least 200,000 shares a day.
• After compiling a list of candidates, it’s time to look for those with good entry points. Two
common entry strategies are to look for breakouts in the direction of the trend—that is, stocks
experiencing a sharp upward movement in price—and pullbacks, which are short-term
moves in the opposite direction of the longer-term trend.

• For breakouts on longs, an entry point could be the first or second new high after the stock
has traded sideways for a few days. For breakouts on shorts, an entry point could be the first
or second new low after a few days of sideways movement. With the pullback strategy, you’ll
want to see the stock correct for a few days in the direction opposite the trend. You might
then consider buying into that short-term weakness on the longs, or selling into that short-
term strength on the shorts.
• Trade setup
• We’ll assume for the sake of discussion that you prefer pullback entries and have narrowed your
choices down to two buy candidates, stock A and stock B. To choose between them, it could make
sense to bring a few indicators to bear: price patterns, volume, moving averages, and an indicator
called the stochastic oscillator.

• Because we’re looking for pullbacks, our first task is to confirm a price change is likely to be a
temporary move and not full-on reversal. Chances of a reversal are lower if the stock has pulled back
to a support level, such as a moving average or an old low. We also want to know if a pullback is
ending. For example, if a stock can push past the previous day’s high, it could mean the uptrend
resuming.

• Stock A
• Here’s where we bring in the stochastic oscillator. Basically, this is a momentum indicator that
compares a stock’s current price to its highs and lows over a given period. Values can range from 0 to
100, with a reading over 75 indicating that the stock may be “overbought” and possibly overextended
on the upside. Readings under 25 indicate that the stock is “oversold” and possibly overextended on
the downside. On a chart, the stochastic oscillator consists of two lines, the %K (fast line, in red in the
chart above) and %D (slow line, in blue). The former is the value for the current trading session. The
latter is a three-day moving average of the former.
• Simplify your stock selection
• Stock selection doesn’t have to be difficult, but you do need to be flexible. Look for markets that are
moving, but also be willing not to trade. Consider going short, as well as long. Finally, and perhaps
most importantly, you need to be disciplined. Don’t let the inevitable bad trades turn into a disaster.
Keep your losses small and live to trade another day.