Investment Psychology: Identifying Financial Capability of Three Diversified Companies

This article discusses the financial history of three diversified companies, their competitiveness, and future performance prediction. It also states the reason behind buying the shares. The subject is Investment Psychology and the course code is not mentioned. The college/university is not mentioned.

Running head: INVESTMENT PSYCHOLOGY
Investment Psychology
Name of the Student:
Name of the University:
Authors Note:

INVESTMENT PSYCHOLOGY
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Table of Contents
Introduction:...............................................................................................................................2
Identifying the industry:.............................................................................................................2
Conducting research on financial History:.................................................................................2
Depicting how it fairs against the competition:.........................................................................4
Stating the reason behind buying the shares:.............................................................................5
Predicting future performance of the company by evaluating past peaks and troughs:.............6
Conclusion:................................................................................................................................6
Reference and Bibliography:......................................................................................................8

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Introduction:
The overall aim of the assessment is to identify financial capability of three
diversified companies, which could increase return from investment for investors.
Furthermore, the assessment also focuses on detecting the performance of all the 3 selected
companies are relatively compared to its competitors by identifying different ratios and
current situation of the organization. The evaluation of past performance is relatively helpful
in depicting the future performance of the selected companies.
Identifying the industry:
Amazon.com Inc. is listed in consumer service industry, where it has become the
leader of the industry by capturing market share all over the world. Coca Cola Bottling Co.
Consolidation is under the beverage industry, where the organisation provides soft drinks to
its customers. Domino’s Pizza Inc mainly falls in food delivery industry, where the overall
income of the company has grown adequately over the period. The identified industry mainly
helps in understanding the competitions of the company, which could help in detecting their
performance.
Conducting research on financial History:
Amazon.com Inc 2015 2016 2017
Operating Margin 2.090% 3.080% 2.310%
Gross Margin 20.510% 22.140
%
22.870%
Quick Ratio 0.770 0.780 0.760
Debt/Equity 1.060 0.790 1.370

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The above table depicts the overall financial performance of Amazon ink from 2015
to 2017 which has relatively improved over the period of 3 fiscal years. The overall operating
profit margin and gross margin of the company as a relatively increased over the period,
while it's quick ratio has declined due to the low accumulation of current assets. This
declining liquidity position is supported by the rising debt condition of the company, which
increases the relevant interest payments that needs to be conducted by the organization1.
Domino’s Pizza Inc 2015 2016 2017
Operating Margin 18.290% 18.360
%
18.700%
Gross Margin 30.820% 31.050
%
31.060%
Interest coverage 4.080 4.130 4.270
Quick Ratio 0.700 0.480 0.530
The performance of Domino's Pizza is identified with the help of above table, which
relatively indicates high profitability ratio for the organization. This increment in profitability
ratio depicts the overall rise in revenues and net profit that is generated by the organization
over the period of 3 financial years. The interest coverage ratio as a relatively improved over
the period, which indicates the rising capability of the company to accumulate more debt. On
the other hand, the quick ratio of the organization has declined in comparison to 2015, due to
the increment in liabilities, as compared to the current assets.
Coca Cola Bottling Co. Consolidation 2015 2016 2017
1 Editorial, Reuters. "${Instrument_Companyname} ${Instrument_Ric} Financials |
Reuters.Com." U.S.. N. p., 2018. Web. 9 Apr. 2018.

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Operating Margin 4.260% 4.050% 2.220%
Gross Margin 39.070% 38.520% 35.640%
Debt/Equity 2.770 3.420 3.060
Quick Ratio 0.890 0.840 0.800
The financial performance of Coca Cola bottling has the relatively declined for the
period of 3 years, which could be identified from the profitability ratios. Moreover, the
organization is supported by the reduction and quick ratio and increment in debt to conduct
their operations. Therefore, from the evaluation of the ratios the overall declining
performance of Coca Cola bottling can be identified.
Depicting how it fairs against the competition:
CompanyName Close Market Cap P / E Ratio
Pepsico, Inc. $
109
155,195,944 32
Coca-Cola Bottling Co. Consolidated $
175
1,247,890 17
The competitor of Coca-Cola has a higher market cap and P/E ratio, which relatively
depicts the low demand of the company in the stock market. However, the rising share price
of Coca-Cola indicates the competitive edge against its competitor. Moreover, the
competitive level the company has mainly declined due to the high exposure of PepsiCo in
the market2.
2 Editorial, Reuters. "${Instrument_Companyname} ${Instrument_Ric} Financials |
Reuters.Com." U.S.. N. p., 2018. Web. 9 Apr. 2018.

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CompanyName Close Market Cap P / E Ratio
Amazon.com, Inc. $
1,405
680,281,680 228.49
CDW Corporation $
68
10,400,631 20.41
The competitiveness on Amazon can be identified from close price, market cap, and
P/E ratio of the company, which is relatively higher in comparison to with competitor. This
indicates the high probability of Amazon to generate high returns from investment and
increase investors wealth.
CompanyName Close Market Cap P / E Ratio
Domino's Pizza Inc $
231.46
9,968,982 39.57
Sysco Corporation $
59.72
31,169,003 26.66
However, from the evaluation Domino’s Pizza is detected to be at Higher competitive
level than its competitor. This is relatively identified from the P/E ratio, which depicts the
overall probability of the company to increase share value in future. Therefore, the
competitiveness of Domino’s Pizza is relatively higher in comparison to its investors3.
3 Editorial, Reuters. "${Instrument_Companyname} ${Instrument_Ric} Financials |
Reuters.Com." U.S.. N. p., 2018. Web. 9 Apr. 2018.

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Stating the reason behind buying the shares:
There is a logical reason behind the selection of the stocks, which are relatively
detected, as one of the leading companies in the sector. The organizations such as Amazon,
Coca Cola bottling, and Dominos are considered the market leaders, as they have captured
the maximum market for the product. Therefore, investment in these companies would seize
adequate returns that is needed by investors.
Predicting future performance of the company by evaluating past peaks and troughs:
CompanyName Close price 52 Weeks High / Low
Domino's Pizza Inc $ 231.46 $ 236.93/$ 166.74
Coca-Cola Bottling Co. Consolidated $ 174.75 $ 249.54/$ 168.54
Amazon.com, Inc. $ 1,405.23 $ 1,617.54/$ 884.49
The above table relatively depicts the Close Price, 52 Weeks High and 52 Weeks Low
of the three companies, which could help in identifying the future performance of the
companies. From the overall evaluation it could be identified that investments in Domino's
Pizza, Coca Cola bottling, and Amazon Inc would eventually allow investors to generate
higher returns, as the close price is at adequate levels, which could increase in future. After
evaluating the 52 weeks high and 52 weeks low condition of the stocks it could be identified
that the trend is relatively up, where the current value of the stocks will increase4.
4 Cervelló-Royo, Roberto, Francisco Guijarro, and Karolina Michniuk. "Stock market trading
rule based on pattern recognition and technical analysis: Forecasting the DJIA index with
intraday data." Expert systems with Applications 42.14 (2015): 5963-5975.

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Conclusion:
The financial history of the companies is evaluated, while the statement regarding the
reason behind the purchase of shares are also conducted. Moreover, with the detection of
peaks and troughs the overall future performance of the companies is predicted, which might
allow investors to improve the returns from investment. Therefore, the investments conducted
in the selected stocks would eventually allow the investors to generate higher returns from
investment.

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Reference and Bibliography:
Cervelló-Royo, Roberto, Francisco Guijarro, and Karolina Michniuk. "Stock market trading
rule based on pattern recognition and technical analysis: Forecasting the DJIA index with
intraday data." Expert systems with Applications 42.14 (2015): 5963-5975.
Chandra, Prasanna. Investment analysis and portfolio management. McGraw-Hill Education,
2017.
Editorial, Reuters. "${Instrument_Companyname} ${Instrument_Ric} Financials |
Reuters.Com." U.S.. N. p., 2018. Web. 9 Apr. 2018.
Editorial, Reuters. "${Instrument_Companyname} ${Instrument_Ric} Financials |
Reuters.Com." U.S.. N. p., 2018. Web. 9 Apr. 2018.
Editorial, Reuters. "${Instrument_Companyname} ${Instrument_Ric} Quote|
Reuters.Com." U.S.. N. p., 2018. Web. 9 Apr. 2018.
Kang, Yan-Qing, et al. "Environmental assessment and investment strategy for China's
manufacturing industry: A non-radial DEA based analysis." Journal of Cleaner
Production175 (2018): 501-511.
Mikesell, Raymond F., and John W. Whitney. The world mining industry: Investment
strategy and public policy. Routledge, 2017.
Stanković, Jelena, Ivana Marković, and Miloš Stojanović. "Investment Strategy Optimization
Using Technical Analysis and Predictive Modeling in Emerging Markets." Procedia
Economics and Finance 19 (2015): 51-62.