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Investing money in equity securities is a risky and complicated game because there are considerable fluctuations in the stock market. For example, one day your investment portfolio can be up 200%, the next day you are almost broke. Therefore, deep equity analysis by using fundamental analysis techniques together with other financial risk analysis techniques such company beta is very important.
A stock market is an equity market. It is a public entity for the trading of company stock shares and derivatives at an agreed price. These securities are listed on a stock exchange (e.g., Toronto Stock Exchange) as well as those only traded privately (over the counter market) such as National Association of Securities Dealers Automated Quotations (NASDAQ).
Although investment in equity securities is a risky game, your investment management style, philosophy, and strategy can increase the rate of return on your investment portfolio. Equity analysis involves applying the fundamental analysis techniques (e.g., ratio analysis, company beta, qualitative analysis such as quality of management team, etc.) to make stock investment decisions in the stock market.
Suppose you have been appointed as a financial analyst. One of the high-profile (wealthy) clients, Mr. Smith, with $10,000,000 net worth approached you for your advice. The client is young and is interested in investing $500,000 in the stock market.
Please choose four publically traded companies from the same industry, perform equity analysis, and then recommend one company to your high profile client. The four companies can be listed on Toronto Stock Exchange, New York Stock Exchange or any other stock exchange.
Based on your careful equity analysis of four stock companies, please prepare a 8 to 12 page report by answering the following question and by providing a high-quality argument:
Which company would you recommend to your high-profile client? Why?
WestJet is a flourishing international airline which currently employs 12,000 personnel called as WestJetters (Workpolis, 2017). Apart from its regular flight services, it also provides vacation packages which include air travel, hotel and car transport and a regional airline. It has launched an Ultra-Low-Cost Carrier (ULCC) as a separate brand and has planned entry into Asian markets which is evident from its orders for Boeing 787-9 Dreamliner aircraft.
Being caring is the primary value of the company and it is followed as a culture (WestJet Airlines, 2017a). The company cares for its employees who in turn care for its guests, who are the revenue providers. This cycle assists in the alignment of employee behaviour with the company thereby encourages guest appreciation. WestJetters are known for their exemplary service. Some examples include a flight attendant taking care of a cranky baby for parents (Pittman, 2017)and a pilot buying pizza for stranded travelers of rival airlines (The Canadian Press, 2017). The employees are known for their customer service excellence.
WestJet has a modernized fleet comprising of Boeing 767-300, and the Boeing Next-Generation 737-600, 737-700 and 737-800 aircrafts. These aircrafts utilize Blended Winglet Technology, which enhances aerodynamics and operational handling thereby reducing fuel consumption by 4%. Whereas WestJet Encore's fleetinclude Bombardier Q400 NextGen turboprops to offer affordable air travel for the short haul (WestJet Airlines, 2017d).
WestJet has entered in to several agreements with other regional and international airlines (WestJet Airlines, 2017c). The Code-share agreement allows various airlines for the sale of seats on the same flight as if it is their own. Interline agreement allows travelers to easily connect different airline flights to reach their final destination.
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