Guidelines Before investing, a wise investor should determine whether the investment under consideration makes financial sense. Therefore, building an investment case is the first step for presenting a compelling case for investment. While the content of a business case can be very various, there are a minimum of four sections which are “mandatory” in order to make a decision about a specific investment. The investment case This section provides some background information on the stock under consideration. It paints a picture of the dynamic situation of the stock (see the sample). The sector outlook This is the analysis of the current condition and future prospects of the sector the stock belongs to. Sector analysis serves to provide an investor with an idea of how well companies within a particular sector are expected to perform as a whole. Sector analysis is employed by investors who are using a top-down approach to selecting stock to invest in. This is an approach which involves looking at the overall picture of the economy (such as GDP, trade balances, currency movements, inflation, interest rates and other aspects of the economy), to identify high-performing sectors and countries. After examining different industrial sectors they select those that are forecast to outperform the market. From this point, they analyse stocks of specific companies of the sector to choose potentially successful ones as investments. Therefore they analyse the company (stock) they choose by comparing it with the average performance of the sector overall to see and justify that investing in the specific stock is a prominent investment (see the comparative analysis in the sample). Fundamental analysis The financial analysis is certainly a critical component of the story. If your opportunity or idea will not provide an adequate financial return (or even a positive return), you should give up this investment. Fundamental analysis determines the health and performance of an underlying company by looking at key numbers and economic indicators. For stocks and equity instruments, this method uses revenues, earnings, future growth, return on equity, profit margins and other data to determine a company’s underlying value and potential for future growth. In terms of stocks, fundamental analysis focuses on the financial statements of the company being evaluated (see the sample). This method of security analysis is considered to be the opposite of technical analysis. Unlike fundamental analysts who attempt to evaluate a security’s intrinsic value, technical analysts focus on charts of price movement and various analytical tools to evaluate a security’s strength or weakness and forecast future price changes. Risk Analysis Risk analysis is the study of the underlying uncertainty associated to the returns (variance of stock returns and possible future economic states). Risk analysis must be both quantitative and qualitative. Under quantitative risk analysis, you may use a scenario analysis. Scenario analysis is the process of estimating the expected value of a stock after the occurrence of an unfavourable event. These assessments can be used to examine the amount of risk present within a given investment as related to a variety of potential events, ranging from highly probable to highly improbable. Instead, qualitative risk analysisinvolves a written definition of the uncertainties, an evaluation of the extent of impact if the risk ensues, and countermeasure plans in the case of a negative event occurring. Examples of qualitative risk tools include SWOT Analysis. SWOT analysis is a process that identifies a company’s strengths, weaknesses, opportunities and threats. 

SWOT analysis should be short and simple, and should avoid complexity and over-analysis, as much of the information is subjective. • Strengths describe what a company excels at and separates it from the competition: things like a strong brand, loyal customer base, strong balance sheet, unique technology and so on. • Weaknesses stop a company from performing at its optimum level. They are areas where the business needs to improve to remain competitive: things like higher-than-industry average turnover, high levels of debt or cash, etc. • Opportunities refer to favourable external factors that a company can use to give it a competitive advantage. For example, a car manufacturer may be able to export its cars into a new market, increasing sales and market share, if tariffs in a country are substantially reduced – the “opportunity” in this case. • Threats refers to factors that have the potential to harm a company: things like rising costs for inputs, increasing competition, tight labour supply and so on. Conclusions Summarize the characteristics of your stock and why you recommend to invest in it. References Write some references in Harvard style. Do not include References in the word count. (Warning: The sample essay is not a benchmark essay so please do not replicate exactly the sample essay. Try to be as much original as you can)