AMBO UNIVERSITY WOLISO CAMPUS

SCHOOL OF BUSINESS AND ECONOMICS

DEPARTEMENT OF AGRICULTURAL ECONOMICS

GROUP :PRESENTATION GROUP TWO

SN Name Id No.
1 Mubarek Ebrahim UGR/36589/12

2 Terefe Bekela UGR/36641/12

3 Abraham Hamito UGR/36400/12
4 Tsegaye Tesfaye UGR/36162/12 APRIL, 2022
5 Almetu Usman UGR/36592/12
WOLISO, ETHIOPIA
 What Is Investment Analysis?
Investment analysis refers to evaluating investments such as
stocks, bonds, or even property. The process involves
researching, evaluating, and understanding an investment
opportunity or industry to determine its value, future
performance, and suitability for purchase. Investment analysis is
also often referred to as security analysis, or financial analysis.
Investment analysis is a broad term for many different
methods of evaluating investments, industry sectors,
and economic trends. It can include charting past
returns to predict future performance, selecting the type
of investment that best suits an investor's needs, or
evaluating individual securities such as stocks and bonds
to determine their risks, yield potential, or price
movements.

 
Investment analysis is key to a sound portfolio
management strategy.
 Understanding Investment Analysis
 The aim of investment analysis is to determine how an
investment is likely to perform and how suitable it is for a
particular investor. Key factors in investment analysis include
the appropriate entry price, the expected time horizon for
holding an investment, and the role the investment will play in
the portfolio as a whole.
In conducting an investment analysis of a mutual fund, for
example, an investor looks at how the fund performed over
time compared to its benchmark and to its main
competitors. Peer fund comparison includes investigating
the differences in performance, expense ratios,
management stability, sector weighting, investment style,
and asset allocation.In investing, one size does not fit all.
Just as there are many different types of investors with
unique goals, time horizons, and incomes, there are
investment opportunities that match those individual
parameters.
 "Investment analysis is the study of financial securities for
the purpose of successful investing."
  Investment Analysis, Gareth D. Myles
 
The reason for sound security analysis is straightforward:
Investors need to understand what they are investing in
otherwise it is mere speculation or gambling, like playing
slots at the casino. Warren Buffett refers to this as “greater
fool” investing, where you hope there’s a fool greater than
you to buy the security at a higher price.
 
If you understand the investment, you're less likely to
make an expensive mistake. Having a clear goal and a
strategy for analyzing an investment is key to creating
a sound portfolio and ultimately achieving great
returns.
 Types and Methods of Investment Analysis
 there are two general paths that you can take to assess an
investment: bottom-up analysis and top-down analysis.
• What is Bottom-up Analysis?
 A bottom-up approach to investment analysis focuses on the
financial analysis of individual stocks to understand its
potential. Such research would include understanding what
the company does, its valuation, the management's
competency, pricing power, competitive advantage, and any
other relevant criteria. 
Bottom-up research excludes focusing on economic cycles and takes a
microeconomic view rather than a macro view of the economy. It starts
with the details of lots of small pictures and works up to a conclusion. 
Instead, it aims to find the best companies and stocks regardless of the
overarching trends. In essence, bottom-up investing takes a
microeconomic approach to investing rather than a macroeconomic or
global approach.
 
The global approach is a hallmark of top-down investment analysis. It
starts with an analysis of the economic, market, and industry trends
before zeroing in on the investments that will benefit from those
trends.
 
 Some big proponents of this bottom-up method of
analysis are Warren Buffett and Benjamin Graham. And
although Mr. Buffett does not report to find investments
through a top-down view, he certainly keeps an eye on
the broader economy‘s bigger picture
 What is Top-down Analysis?
 A top-down approach starts with analyzing the broader economy,
markets, and industry trends. This then allows the investor to narrow
down investment opportunities that will benefit from the macroeconomy
trends. It starts with the big picture and works down. 
In contrast, the bottom-up investor may have found that an industrial
company made for a compelling investment and allocated a significant
amount of capital to it even though the outlook for the broader industry
was relatively negative. The investor has concluded that the stock will
outperform its industry.
 
 Fundamental Vs Technical Analysis
 There are several different investment analysis methods that an
investor can undertake. As the title suggests, these include
fundamental and technical analysis.
 What is Fundamental Analysis?
 Similarly to bottom-up analysis, fundamental analysis focuses on the
financial health of the company. Fundamental investors look to find
stocks that have been mispriced by Mr. Market and are trading at less
than their intrinsic value. This analysis also allows for an assessment of
the competency of management and competitive advantage of the
business.
Often using bottom-up analysis, these investors will evaluate a
company's financial soundness, future business prospects, and
dividend potential to determine whether it will make a satisfactory
investment
 What is Technical Analysis?
 A technical analyst seeks to evaluate patterns in stock prices using
computerized charts and graphs. There is little interest in the
intrinsic value of a stock or the company; it is more about using
patterns of price movements, trading signals, and charting to find
potential trading ideas. Technical analysis is like reading the signs
in the clouds, be navigating by the stars, or the daily horoscopes.
 Day traders make frequent use of technical analysis in
devising their strategies and timing their buying and selling
activity.
 Understanding Investment Analysis
 The purpose of security analysis is to conclude the likelihood
that the investment will perform positively or in line with
your expectations. An excellent way to think of the
investment analysis process is to behave like an investigative
journalist. 
 Dig into the company background, use web-based satellites to
look at company properties, read employee comments, speak to
former workers, review the annual reports, and listen to the
investor calls. Phil Fisher would call this process scuttlebutt, and
it was fundamental to his success.
 A simple way to conduct a fundamental analysis is to compare
an investment's performance and fundamental metrics to a
benchmark such as the S&P 500 or industry sector. If metrics
such as ROIC and ROA are better than the benchmark, then the
company appears to be of better quality.
 
 Another key to consider is finding a fair price to purchase the
stock, the time horizon for the investment, and the role the
investment is to play in your portfolio. Buffett states that the
ideal holding period of a company is forever. With this mindset,
however, you may not be getting the best returns that are on
offer. To build a fortune, as Buffett did, net-nets are the way to go
but more on this later.
 
 Investment Analysis Process
 An investor needs to have a robust investment process. Undertaking a
strong analysis of potential investments is how you will make your
investing strategy effective, accurate, actionable, and repeatable.
A Comprehensive Fundamental Investment Analysis Will Include…
A full and comprehensive analysis can seem daunting, and that's
because it is. You are unlikely to know everything about a company, and
it can seem an inefficient use of time unless you have a systematic
process. Many investors undertake it on the assumption that the more
you know, the more you will earn. But knowing something about a
company does not make it a good investment.
 
 Basic Fundamental investment analysis template
 CompanyBasics: Name, location, exchange listing, business description, key
management, date founded. The company basics are easy to find within the
company annual report
Securities issued: All classes of common stock, number of shares of each, rights
of each issue, buybacks & new issuance, whether the company is planning on
issuing new shares in the future.
Financial position: Debt to equity, current ratio, quick ratio, interest coverage,
off-balance sheet liabilities, and fundamental solvency.
Operating performance: Change in revenue, profit, and margins over a period of
years.
THANK YOU FOR YOUR ATTENTION.

THE END