Final UPS Team Paper!

Strong balance sheet the company is a safe investment

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strong balance sheet, the company is a safe investment while it simultaneously focuses on growth. Nike is generating positive free cash flow and with minimal debt, which had made this stock overall an overall safe one. There had not been any significant events that had occurred throughout our holding period for Nike. There are a few lawsuits that currently need to be resolved. However, nothing had drastically impacted the performance of Nike, as its returns remained positive week-to-week. The company’s use of ‘Fuel’ had been violated, representing Nike Fuel. This initiated a trademark lawsuit. Judgment is still unknown (“Nike’s New FuelBand Product”). Meanwhile, Nike sued Reebok over Jets player Tim Tebow’s apparel. Reebok allegedly had done so without permission or valid license. Although this is the case, Reebok claims that it still had a valid group license with NFL
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players (“Tim Tebow Sales Halted”). Overall, the company did not encounter any severe issues that could have drastically affected the portfolio. Another well performing stock that we owned was yoga apparel store Lululemon Althetica (LULU). With this investment, the team took a slight risk, simply because the company is fairly new, but we saw an opportunity to have a greater return based off of this speculation in the market. The environment played an immense role behind this stock selection. We saw how both the “workout culture” and the “yoga culture” were growing in America, and we knew that the clothing this store makes is relatively popular within that target market. The company makes great, high-quality products and has high customer satisfaction and retention. The company is able to charge a premium price for its products and is rarely on sale! Although the group knew the company had a great following, we needed to support my decision with some financials, and LULU’s were impressive. The company has a quarterly revenue growth of 51.4%; this was a key statistic when we were making my decision because it showed that the company was really focused on growing. Additionally, supporting this concept was LULU’s price/earnings to growth ratio, which was 1.76. Another important factor when choosing LULU was comparing it to its competitors in the industry. LULU outperformed all of its competitors, including: Under Armour, Nike, and Adidas. Overall, despite taking a risk with LULU we knew we would receive greater returns by doing so, and this strategy paid off as the stock grossed $734,400. In regard to the health care industry, analysts feel that this industry will be boosted for at least the upcoming year. The industry is getting its greatest strength over the next several years from incentives to obtain health care information technology products. Since health care is always in high demand, the use of operating tools and devices are especially important. With this understanding, we had chosen to invest in two stocks from this particular industry: SXC Health Solutions and Intuitive Surgical.
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