Cole Blackmore
Xinxin Li
Agenda
 Overview
 Business Analysis
 Economic Analysis
 Financial Analysis
 Valuation Analysis
 Recommendation
Sector Breakdown
S&P 500
SIM
 12.46%
 14.33%
 Overweight: 1.87%
Sector Industries
Sector:
SIM:
Hotels, Restaurants, Leisure
Housewares Durables
Internet & Catalog Retail
Media
Textiles, Apparel, Luxary
Goods
Apparel & Accessory
Automobile Manufactures
General Merchandise
Retail Apparel
Cable & Satellite
Largest Companies










Comcast Corp
Amazon.com Inc
Home Depot Inc
Walt Disney Co
McDonald’s Corp
Twenty-First Century Fox, Inc
Ford Motor Co
Time Warner Inc
Starbucks Corp
NIKE Inc
Sector Performance
 YTD: Outperformed S&P by ~9%
Sector Performance
 QTD: Outperformed S&P by ~1%
Agenda
 Overview
 Business Analysis
 Economic Analysis
 Financial Analysis
 Valuation Analysis
 Recommendation
Sector Performance
 Overperforms: Early Stage
 Underperforms: Late & Recession
Business Analysis: Demand
 Non-essential Goods
 Sector highly cyclical: very sensitive
 Often leads economies out of Recessions
Porter’s 5 Forces
 Barriers to Entry: High
 High Start-up Cost
 Mature Firms; Incumbent
Power
 Buyer Power: High
 Easy switching costs (Retail
& General Merchandise)
 High Competition=Price
Wars
 Supplier Power: Variable
 Depends on Industry
 High Raw Materials Costs &
Multiple Vendors=Low
Bargaining Power
 Substitutes: High
 Product availability very
diverse: ie, AE, ANF, Aero all
offer similar clothing.
 Lack of differentiation
 Competition: High
 Retail Apparel: has many
established brands
 Automobile Manufactures:
emergence of foreign cars
built & sold in US
Agenda
 Overview
 Business Analysis
 Economic Analysis
 Financial Analysis
 Valuation Analysis
 Recommendation
Retail Sales

Employment
Disposable Income
Consumer Spending
Real GDP
Agenda
 Overview
 Business Analysis
 Economic Analysis
 Financial Analysis
 Valuation Analysis
 Recommendation
Sector Sales
EPS
Net Profit Margin (Absolute)
Net Profit Margin (Relative S&P
500)
Housewares Durables
Housewares Durables
Apparel
Cable & Satellite
Auto
Auto Parts
Agenda
 Overview
 Business Analysis
 Economic Analysis
 Financial Analysis
 Valuation Analysis
 Recommendation
Sector Performance
Absolute Basis
P/Trailing E
P/Forward E
P/B
P/S
P/CF
High
53.7
44.1
4.4
1.3
12.2
Low
13.9
13.0
1.5
0.4
5.7
Median
20.0
17.4
2.5
0.9
9.1
Current
20.9
19.0
4.0
1.3
12.2
Relative to SP500
P/Trailing E
P/Forward E
P/B
P/S
P/CF
High
3.9
3.0
1.7
0.9
1.2
Low
1.1
1.0
0.7
0.5
0.7
Median
1.2
1.2
1.0
0.6
0.9
Current
1.3
1.2
1.6
0.9
1.1
Industry Performance
 Automobile Manufacturers
 Cable & Satellite
Industry Performance
 Hotel, Restaurants, & Leisure
 Houseware Durables
Industry Performance
 Internet & Retail Catalog
 Multiline Retail
Industry Performance
 Retail Apparel
Relative to SP500
P/Trailing E
P/Forward E
P/B
P/S
P/CF
High
Low
1.6
1.3
3.1
1
1.5
Median
0.7
0.73
1
0.4
0.6
Current
1
1
1.5
0.7
1
1.1
1.2
2.5
0.9
1.3
Agenda
 Overview
 Business Analysis
 Economic Analysis
 Financial Analysis
 Valuation Analysis
 Recommendation
Recommendation
 Sim Portfolio should:
 Stay Overweight: trailing P/E has consistently
performed at or above relative to S&P
 Underweight: Auto Manufacturers
 Diversify by adding new Industry to portfolio
 Pro’s & Cons:
 Business cycle still in expansion stage, continued
outperformance
 Industries sensitive to global economic changes (ie
European markets)