Investing in Selected Technology Companies

Weizhi Sun

Bachelor's thesis

Abstract:

Financial market is a place that people trade different financial securities to earn the profits in general. Capital market plays a significant role in the financial market. It provides people funds to invest or debt financing for long term, which greater than one year. Because of the uncertainty of the capital market in the future, investing in capital market is not easy. Therefore, my aim is to evaluate investments in the capital market. The main objective of this thesis is to evaluate performance of the selected technological companies in the capital market. Due to Apple company and Google company are both leading companies in IT industry, they are chosen to compare to each other. According to the investing triangle, we evaluate these two companies by using return, risk and liquidity. Comparing Apple company and Google company, it can let us understand more about the condition and situation of the IT industry in the USA, and the results will help us to figure out which choice is better for the investors according to the different criteria. The criteria which includes stock prices, market values, dividends, annual returns, monthly returns and risks are counted to help us evaluate the advantages and disadvantages of both Apple company and Google company. In this thesis, the first part is the principles of investing in the financial market in general. The classification, history, roles and functions, main instruments and basic principles of investing in capital market are all included in the first part. The second part introduces mainly the development history of Apple company and Google company, and basic financial characteristics such as ROA and ROE shows us how profitable these two companies are. Then market indicators, for example, EPS, P/E ratio and dividend payout ratio will be introduced and analyzed in the second part as well. The third part is the core of my study. In this part, the main objective is comparison of both Apple’s and Google’s stock performance. It composes of monthly and annual returns and cumulative returns. Risk is calculated by using standard deviation method. Liquidity is also mentioned to show the volume of the stocks. By comparison of Apple company and Google company, we draw a conclusion that based on the used criteria we could suggest to invest in Apple’s stock rather than Google’s, with high dividend and lower risk.

Abstract:

Financial market is a place that people trade different financial securities to earn the profits in general. Capital market plays a significant role in the financial market. It provides people funds to invest or debt financing for long term, which greater than one year. Because of the uncertainty of the capital market in the future, investing in capital market is not easy. Therefore, my aim is to evaluate investments in the capital market. The main objective of this thesis is to evaluate performance of the selected technological companies in the capital market. Due to Apple company and Google company are both leading companies in IT industry, they are chosen to compare to each other. According to the investing triangle, we evaluate these two companies by using return, risk and liquidity. Comparing Apple company and Google company, it can let us understand more about the condition and situation of the IT industry in the USA, and the results will help us to figure out which choice is better for the investors according to the different criteria. The criteria which includes stock prices, market values, dividends, annual returns, monthly returns and risks are counted to help us evaluate the advantages and disadvantages of both Apple company and Google company. In this thesis, the first part is the principles of investing in the financial market in general. The classification, history, roles and functions, main instruments and basic principles of investing in capital market are all included in the first part. The second part introduces mainly the development history of Apple company and Google company, and basic financial characteristics such as ROA and ROE shows us how profitable these two companies are. Then market indicators, for example, EPS, P/E ratio and dividend payout ratio will be introduced and analyzed in the second part as well. The third part is the core of my study. In this part, the main objective is comparison of both Apple’s and Google’s stock performance. It composes of monthly and annual returns and cumulative returns. Risk is calculated by using standard deviation method. Liquidity is also mentioned to show the volume of the stocks. By comparison of Apple company and Google company, we draw a conclusion that based on the used criteria we could suggest to invest in Apple’s stock rather than Google’s, with high dividend and lower risk.

Keywords

Capital market, stock performance, technology companies, return, risk, liquidity, investment

Keywords

Capital market, stock performance, technology companies, return, risk, liquidity, investment

Language used: English

Date on which the thesis was submitted / produced: 6. 5. 2016

Thesis defence

• Date of defence: 7. 6. 2016
• Supervisor: Martina Novotná
• Reader: Tomáš Tichý

VŠB - Technical University of Ostrava

Ekonomická fakulta

Bachelor programme / field:
Hospodářská politika a správa / Finance