The Fundamental Research Project: Individual Stock Report

The Fundamental Research Project is designed to simulate the type of research work
expected from a “Buy-Side” fundamental analyst. The project will focus on the
examination and valuation of a stock from a selected investment universe. Students
are expected to explore theories that underlie asset pricing, practiced techniques that
identify asset-mispricing situations, and strategies that exploit the presence of
temporary asset-mispricing. Students will experience the benefits and pitfalls various
models: The Dividend Discount Model (DDM), The Gordon Growth Model, The
Discounted Cash Flow Model (DCF) and other relative valuation techniques. A key
to success in the investment world is the ability to think out of the box. Through
class discussions and teamwork the project is designed to illustrate and highlight
Qualitative and Quantitative aspects of Investment Research.
Week 1: Students will be grouped into Global Industry Classification
Standard (GICS) team. Each team will elect the Sector Group Leader. An
investment universe of stocks will be provided to the team along with Sector,
Industry and fundamental data.
Weeks 2: By the end of the second session, each student will select a stock
within his or her team’s assigned sector. Each sector leader must make sure
that there is no industry overlap between team members. (i.e. members in
each sector team must choose stocks from different industry). The “Class
Research Portfolio” will be constructed based on the students’ stock selection.
Each student must state their rationale (Investment Thesis) for selecting the
stock.
Week 3: Each student is required to follow their individual stock selection
from week 3 onward (stock coverage). A student must be prepared to answer
movement in his or her stock caused by news flow, earnings report or any
other event in the market place.
Week 8: Each student must present a price target or his or her stock using
their pro-forma company model
Week 9: Using FactSet or Bloomberg data (or other sources if FactSet or
Bloomberg is not available to you), retrieve the consensus EPS estimate for
the selected stock. Calculate consensus price target using latest P/E multiple
available for the stock
Week 10 to Until Due Date: Each student must work towards a complete
research report on their selected stocks. Use all resources available in
preparation for the Individual Stock Report.
A Stock Report: (A Sample Report will be posted on blackboard)
among topics you should cover in this written report are:
Your description of the company – business, products, management, relevant
history, future plans.
Your Investment Thesis
Consensus price target (Street Estimates)
Your Price Target with Upside/Downside risk
Your explicit recommendation for the stock (“Buy”or “Sell”)
Risks that the company will likely face in short run/long run (Porter’s 5 forces
or SWOT analysis)
Future monitoring points

Explain why it should do better than its peers and how the stock is expected to
perform