Chapter_14-SectorIndustry_Analysis

Chapter_14-SectorIndustry_Analysis - Sector/Industry...

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ector/Industry Sector/Industry nalysis Analysis Chapter 14 Charles P. Jones, Investments: Analysis and Management, Tenth Edition, John Wiley & Sons Prepared by G.D. Koppenhaver, Iowa State University 14-1
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Industry Analysis econd step in the fundamental ± Second step in the fundamental analysis of common stocks dustries promising the most opportunity ¾ Industries promising the most opportunity in the future should be considered ± Concepts of industry analysis related to py y valuation principles ± ontinual analysis due to inconsistent Continual analysis due to inconsistent industry performance over time 14-2
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Industry Performance Over Time otential value of industry analysis ± Potential value of industry analysis seen by assessing the performance of ifferent industries over time different industries over time ¾ S&P’s monthly stock price index over a long tome period shows industries perform differently over time ¾ Stock performance affected by industry ± Industries in decline should be avoided 14-3
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Industry Performance Over Time onsistency of industry performance ± Consistency of industry performance ¾ Maintaining positions in growth industries leads to better returns than otherwise ± Can industry performance be predicted reliably on the basis past success? yp ¾ Rankings inconsistent over time ¾ Industries with recent poor performance should not be ignored 14-4
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What is an Industry? re industry classifications clear- ut? ± Are industry classifications clear cut? ± Industries cannot be casually identified nd classified and classified ¾ Diversified lines of business cause classification problems aa o p o b ¾ Industries continue to become more mixed in their activities and less identifiable with on product or service 14-5
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Classifying Industries
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This note was uploaded on 06/02/2011 for the course FINA 3331 taught by Professor Staff during the Spring '08 term at Texas A&M University, Corpus Christi.

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Chapter_14-SectorIndustry_Analysis - Sector/Industry...

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