Table of Contents
Apple Inc.
Apple Inc. is an American multinational corporation which designs, manufactures, and sells consumer electronics and software online. The corporation is recognized globally due to its iconic iPhones smartphones, iPads, and Mac personal computers (Sparks’s para. 3). The reason for selecting this stock is because it continues to report excellent financial reports. The company has paid dividends over the last 10 years, which is an indicator the firm is making profits. The technology industry is one of the driving forces of the global economy. Therefore, it was critical to select a company operating in this industry in order to compare it with other firms in other industries. Moreover, Apple is the largest manufacturer of smartphones in terms of revenues. It has the highest brand name, which cannot be imitated by its competitors. The major competitors of Apple Inc. are Samsung and HP. Finally, Apple Inc. is ranked number one in the technology industry.
We can do it today.
Nike Corporation
Nike Inc. is the largest manufacturer and seller of sport footwear in the world. It has grown from a small company to become the largest seller of sports footwear. It has invested its resources in research and development, which has enabled it to succeed in the market. The main reason for choosing Nike is because it has continued to report high revenues irrespective of stiff competition from its main competitors, Adidas and Under Armour Inc. Nike’s revenues hit $30billion in 2015, which was a significant increase from the previous year (Kalogeropoulos para. 7). Moreover, the company has continued to pay high dividends, which is an indicator it will continue to pay dividends in the unforeseeable future. Nike is ranked as the market leader in the manufacture of sports footwear.
Coca Cola
Coca Cola is an American multinational manufacturer of nonalcoholic drinks. It is headquartered in Atlanta, Georgia. It manufactures, sells, and distributes nonalcoholic beverages, concentrates, and syrups. The firm is best known for its iconic product Coca Cola that was invented in 1886 by a pharmacist (Gupta para. 2). Coca Cola was selected for this analysis because it is the largest multinational company that manufacturers nonalcoholic beverages across the world. The company has paid its shareholders dividends over the last three decades. In fact, it is considered one of the companies that have paid dividends every year for the longest time. Hence, it was essential to include it in this portfolio. Coca Cola has the largest market share in the world. Although it faces stiff competition from its main competitor Pepsi in some markets, it has maintained a lead. Coca cola is ranked number one in this industry.
Lockheed Martin
Lockheed martin is the largest global aerospace, security, and defense contractors in the world. The company was formed in 1995 by a merger between Lockheed Corporation and Martin Marietta Company. The company is headquartered in Maryland in Washington DC. It was the largest defense contractors in terms of revenues in 2014 (Miller para. 2). The defense industry is considered one of the most profitable industries in the world due to multibillion contracts awarded by the US military. It was interesting to include Lockheed martin in the portfolio in order to see how it compares with other companies from different industries. The major competitors of Lockheed martin is General Dynamics and Northrop Grumman. It was interesting to evaluate an industry that is under direct control of Congress. The company has maintained high dividends in the last three years. Although the US military budget has declined, it has maintained high dividends. Lockheed Martin is ranked number one in the defense industry.
Wal-Mart
Wal-Mart is the largest multinational retailer corporation in the world. It operates a retail chain of supermarkets, grocery stores, and discount department stores. It is headquartered in Bentonville, Arkansas. It was incorporated in 1969 and it has managed to grow from a several stores to more than 10,000 stores across 28 countries (Bowman para. 5). Wal-Mart is recognized for its strong supply chain management, which has supported the company to expand rapidly. Although the company does not pay high dividends, it has managed to continuously pay dividends in the last five years. The company was of interest because it is the largest retail store in the world. It was critical to include a firm from this industry as a way of diversifying the portfolio. Wal-Mart is ranked number one in this industry. Its main competitors include Costco and Dollar Tree Inc.
Evaluating Market beta
| Beta | Adjusted beta | Source | |
| Apple Inc. | 1.102 | 1.1 | |
| Nike | 0.41 | 0.39 | https://www.reuters.com/finance/stocks/overview/NKE |
| Coca Cola | 0.59 | 0.57 | https://finance.yahoo.com/quote/KO/key-statistics |
| Lockheed Martin | 0.59 | 0.58 | https://finance.yahoo.com/quote/lmt |
| Wal-Mart | 0.05 | 0.045 | https://finance.yahoo.com/quote/WMT/key-statistics/ |
According to Bodie, Beta is a measure of systematic risk or volatility of a security in a portfolio (42). The beta represents the tendency of a security to respond to changes in the market. These companies calculate their beta in two ways. First, they observe changes in the market every day for one month. Then, an average beta is calculated. Secondly, they calculate beta by dividing the covariance of the security return with the bench market return for a specified period. A company that has a beta of higher than 1 means it swings more than the changes in the market; a good example is Apple Inc. However; the other companies have a beta factor lower than 1, which implies they swing less, compared to the changes in the market.
- Bodie, Zvi. Investments. McGraw-Hill, 2013.
- Bowman, Jeremy. “5 Things You Didn’t Know About Wal-Mart Stores Inc.” — What Investors Should Know — The Motley Fool.” The Motley Fool. N.p., 2017. Web. 15 Sept. 2017.
- Gupta, Nikhil. Investors Should Know This About Coca-Cola. N.p., 2017. Web. 15 Sept. 2017.
- Kalogeropoulos, Demitrios. “3 Things You Didn’t Know About Nike Inc. What Investors Should Know — The Motley Fool.” The Motley Fool. N.p., 2017. Web. 15 Sept. 2017.
- Miller, Daniel. What Investors Should Know About Lockheed Martin Corporation’s 23% Jump in Profits. What Investors Should Know — The Motley Fool.” The Motley Fool. N.p., 2017. Web. 15 Sept. 2017.
- Sparks, Daniel. “Apple, Inc.’S Stock’s 40% Comeback — What Investors Should Know — The Motley Fool.” The Motley Fool. N.p., 2017. Web. 15 Sept. 2017.