The report comprises of a comprehensive analysis of the stock investment of $10,000 in the stock exchange. The choice of the stock investment is fundamental due to the increased performance of the target companies to which the stock shares are found to experience positive growth. The investing in stock essay analysis below explains the reasons for the selection of the investment focusing on the specific companies. The analysis of the potential information that may have influenced the decision to invest in the stock exchange is provided in the report. Also, analysis of the potential gains or losses are explained and a comparison of the performance of the investment based on tracking market indexes including a) Dow Jones Industrial Average, S&P Stock Index, and Russell 2000 Index.
Reasons for the Selected Investment
The following analyzes the selected stock investments accompanied by the rationale for the selection of the specific company. This is fundamental to give the reasons for the selection of the investment and the potential gains it’s bound to make on the initial investment of $10,000. As a noteworthy investment, making wise decisions based on research and assessment of the performance of the stock exchange rates of the shares is fundamental to mitigate the downside effect of the investment. Therefore, it is bound to lead to potential gain attained by the company.
Trading as XRX, Xerox Holdings Corp. is one of the best performing and competitive companies in the New York Stock Exchange (NYSE). XRX operating in the information technology and services industry specializes in computer peripherals, indicating a competitive front for the company. Figure 1 shows that the performance of XRX in the month of July 2020 in which the investment was made has been on a steady rise. The shares opened at $15.15 on July 1, 2020, experienced the lowest point on July 9 at $14.605 (-0.545). In the same month, the highest gain was experienced on July 16 at $17.27 (+2.02). In the closing of July 31, marking the end of the four weeks’ investment duration, the shares closed at $16.65 (+1.5 – +9.9%). The choice of XRX was informed by the excellent performance of the company in the past months and years, making it a worthy investment.
Figure 1: XRX July Shares Performance.
(Source: Yahoo! Finance, 2020a).
Chipotle Mexican Grill trades as CMG in the NYSE. CMG’s shares have been a high gaining investment choice in the past decade, owing to the high performance of the company. Chipotle, with its wide and renowned reputation as an ethical company, has attracted extensive customer base leading to increased sales. Such values are fundamental to increasing the customer base on companies operating in the restaurant, hospitality, and food industry. This is critical to the performance of the company in the NYSE. The competitive performance of Chipotle enables its great performance in the NYSE, making it a viable investment choice. Figure 2 outlines the performance of CMG shares over July 2020. The opening of CMG shares on July 1, 2020, stood at $1,053.85. During the entire month, CMG shares do not experience a drop in their value, instead, they maintain continuous growth with the highest value recorded on July 22 at $1,178.595 (+124.745). The closing value of CMG shares on July 31 was recorded at $1,154.11 (+100.26 – +9.51%). This indicates a high gain value from the shares over the indicated period of one month of the investment.
Figure 2: CMG July Shares Performance.
(Source: Yahoo! Finance, 2020b).
Target Corporation, listed as TGT in the NYSE, operates in the Consumer Defensive sector of the Discount Stores industry. The company shows a competitive performance over the past years, making it one of the best companies to invest in the stock exchange. As of July 1, 2020, the purchase of TGT shares opened at $119.91, with the lowest value of the shares being experience on July 8 at $117.70 (-2.21). The subsequent period is characterized by continuous growth and gaining of the value of the TGT shares with the optimal point being recorded on the close of July 31 at $125.88 (+5.97 – +4.98%). This marks a profound growth and value addition of the TGT shares over the one-month period in which the investment was made. As a result, the investment in TGT stocks is bound to generate profits to the initial investment made on the company shares. Figure 3 summarizes the performance of TGT shares over the one-month duration.
Figure 3: TGT July Shares Performance.
(Source: Yahoo! Finance, 2020c).
KLA Corporation is listed in the NYSE as KLAC – a company operating the electronic production equipment sector for the semiconductor equipment and materials. Technology equipment and materials production are one of the most competitive industries globally, attracting massive sales and continuing demand. This investing on KLAC share a promising venture in which the stocks are bound to generate profits. KLAC shares performance in the NYSE as of July 1, 2020, opened at $194.48 at the time of making the investment. Up to July 22, the company experienced continuous gain attaining the highest value at $205.94 (+11.46) before experiencing a stiff downfall to the lowest point on July 24 at $188.21 (-6.27). However, steady growth and recovery of the company stock exchange performance were experienced with the close of July 31, recording a value of $199.83 (+5.35 – +2.75%). Figure 4 summarizes the performance of KLAC shares in the NYSE over the month of July.
Figure 4: KLAC July Shares Performance.
(Source: Yahoo! Finance, 2020d).
Leidos Holdings, Inc. operates in the information technology services industry. In the NYSE, it is listed as LDOS as its trading name. The performance of LDOS shares shows a high resilient potential due to the market performance of the information technology services industry continued growth in demand. The operations of LDOS impacts in the great performance of the company shares in the NYSE. In the investment month, the LDOS shares on July 1, 2020, opened at $93.73. Up to July 13, the company experienced a steady drop in the value of its shares to the lowest point at $85.04 (-8.69). From July 13 to the end of the month, July 31, the value of the shares gained steadily to $95.16 (+1.43 – +1.53%). This shows the resilience of the company to stay afloat and above the initial investment value. Thus, it indicates the continuous performance and potential benefits acquired from investing in the company stocks. Figure 5 summarizes the July monthly shares performance in the NYSE.
Figure 5: LDOS July Shares Performance.
(Source: Yahoo! Finance, 2020e).
Noteworthy Information Impacting Decisions for the Investment
According to a Market Watch article published by van Doorn (2019), all of the five companies Xerox Holdings Corporation, Chipotle Mexican Grill, Target Corporation, KLA Corporation, and Leidos Holdings, Inc. are among the 20 best-performing S&P S=500 Stocks for 2019. For the past decade, the identified companies have stipulated continuous growth and market competitiveness (van Doorn, 2019). This is a clear indication of the market resilience and potential to remain a top performer in the industry. As a result, the information is crucial to influence the investment decision on their shares. The positive growth recorded by all the companies informs the value of investing the money on the stock exchange of the company shares.
Winck (2019) further notes that the S&P 500 index in the year 2019 is on track to post its biggest annual gains attained in the past two decades. All of the five companies to which the stock investments are targeted are recorded among the top eleven best-performing companies S&P 500 stocks. This is an indication of the enormous opportunity to acquire extensive benefits from investing in the stocks of the companies. The viability of the stock investment is informed by the continued performance and competitiveness asserted by the companies.
The markets in which the selected companies belong comprise of the restaurant and information technology services and electronics industry. Plowman (2019) indicates that the restaurant industry is one of the most competitive and rapidly growing industry. For a company like Chipotle with a positive reputation and brand recognition posits a high competitive capacity (Walker & Merkley, 2017). Barba-Sanchez, Calderon-Milan, and Atienza-Sahuguillo (2018) assert that the information technology services and electronics industry is one of the most dynamic and high performing industries. Therefore, it is fundamental to note that companies in these industries are bound to gain more value as the demand increases for the products and services they specialize in the market (Chen, Huang, Liu & Song, 2019). This is bound to generate enormous potential benefits in the investment of stocks from the companies. This information and knowledge on the industry performance and the competitive potential of the companies are integral to informing the stocks’ investment decision.
Analysis of the Investment Results (Gains or Losses)
Table 1 below outlines the stock investment analysis for the period of one month from the buying of shares to the value created at the end of the month. The end of the month indicates the selling point to which determines the potential gains or losses experienced as a result of the stock investments.
Table 1: Stocks Investment Analysis.
|Company||Value at Buying ($)||Value at Selling ($)||Value Gained ($)||Difference Percentage (%)||Invested Amount||Profit (Gain $)|
|Xerox Holdings Corp.||15.15||16.65||+1.5||9.9||3,000||217.62|
|Chipotle Mexican Grill||1,053.85||1.154.11||+100.26||9.51||2,000||2.09|
|Leidos Holdings, Inc.||93.73||95.16||+1.43||1.53||1,500||16.25|
From Table 1 above, the investment of $10,000 in stocks is distributed based on the potential value of returns on each company. The stocks investment on Xerox shares is bound to generate the highest value as a result of the low capital requirement for each share. Xerox shares are purchased at a price of $15.15, making them easier to acquire as much as possible. Chipotle shares purchased at $1,053.85 are expensive, despite the high-profit potential of $100.26 per share. This makes the stocks investment to reduce the amount committed to the investment of Chipotle shares. The total profit (gains) accumulated for the stocks investment in a one-month period entails $261.39 from all the companies. Xerox is the most viable and profits generating company of all the investments.
Investment Performance Comparison: Market Indexes Tracking
Dow Jones Industrial Average
Dow Jones Industrial Average comprises of a stock market index used to measure the stock performance of the thirty largest companies that are listed in the stock exchanges in the US. All of the selected stocks investment companies do not qualify as part of the Dow Jones listed companies. On average, the buying price of Dow Jones shares is rated at $26,428.32, which is a profoundly high value that none of the companies meet (Market Watch, 2020a).
S&P 500 Stock Index
The S&P 500 stock index records all of the five companies selected to make stock investments as among the top 11 best-performing companies (van Doorn, 2019). This indicates the potential and market performance of the companies as among those generating profound profits and dividends for their investors. As a result, they maintain competitiveness and rapid growth in a continuous trend over the years. S&P 500 Index is closed at $3,271.12 per share. This makes the stock market analysis a highly competitive venture to meet the high standards (Market Watch, 2020b).
Russell 2000 Index
Russell 2000 Index shows that the selling of the shares is at $1,480.43, in which only Chipotle shows some potential to get closer to the figure. However, the Russell 2000 Index marked a negative (loss) in the investment of the shares at -14.67 (-0.98%) (Market Watch, 2020c). All the selected companies to which the stocks investments were made all culminate in a positive value acquisition. This is critical as it indicates the generation of profits by the companies in which the stocks investment was made. Hence, assuring the investor of generating profit in the specified period.