INVESTMENT ANALYSIS

FHD-2-205 Investment Analysis



FHD-2-205 Investment Analysis

Introduction

For this investment analysis, I took five FTSE listed companies namely Barclays Bank Plc, Standard Chartered Bank, BG Group, Xstrata, and Royal Dutch Shell. This report shows the average returns for the period taken into consideration as well as commentary on the investment portfolio. Presenting and analysing the position of each company's stock prices, dividends and yields, this report also gives an insight into specific risks of investment in the given stocks.

Companies Stock Price Movements Analysis

First company included in the analysis is Barclays Plc. Barclays Plc earned revenues of £31,440 million ($48,600 million) in the financial year 2010. Firm achieved a growth rate of 8% compare to 2009 financials (Reuters, 2011).

Standard Chartered also shows remarkable return to shareholders in the industry. Company earned 127.2 pounds per share; dividend rate per share stood at 42.88 with dividend yield of 2.74. Company has shown consistent growth of approximate 13% in last three years. Since last year, company share price is higher than index change showing a positive inclination with beta of 1.671 (Reuters, 2011a).

In exploration and production of oil and gas, BG Group has shown a credible performance in last 12 months (Ibis World, 2011). Company EPS stood at 65.9 pounds per share; dividend rate 13.66 with yield of 1.04. Due to decline in the ROE for the year 2010, company's shares have declined significantly from level of 1564 pounds. Currently, share prices are at level of 1311pounds with a 16.5% increase in share in last 12 months (Data Monitor, 2011).

Another company from the same industry included in the portfolio is Xstrata Plc. Xstrata reported an increase of 34.2% in its revenues during FY2010. Asia is largest geographic market for the company that generates revenue of 44%. Company is currently new in the industry with less than a decade.

However, firms share price showed an increase of 16.9% in last 12 months. ROE of the company increase by almost 10% in one year from 2.33% to 13.10%. However, firm share is performing below the profitability index of the FTSE since 2009. P/E ratio stood at level of 15.3, with an expected devaluation in the PE ratio to 6.8 by the end of year 2012 (Data Monitor, 2011).

Royal Dutch Shell Group holds a significant position in oil and gas industry (Ibis World, 2011b).

Earnings per share stood at 212.6 enhancing the profitability of the company and increasing potential for future investment in the industry (Reuters, 2011b). Compare to competitor firms included in the portfolio, share price of Shell group showed an inclined growth of 18.9% (Ibis World, 2011).

Volatility index of the share is 5 compare to FTSE index. Company's beta is almost equivalent to the PI of the FTSE index. As shown in the table, price and index (rebased) have moved almost in a similar pattern and closely to each other showing low variance of risk. The table highlights a stock price comparison of comparison of firms from oil ...