Stocks can be pitched to clients in numerous ways and it is the job of Sales people to help determine the most effective method of pitching depending on the particular client and their specific objectives. Candidates may be asked to pitch a company’s stock in an interview. This requires candidates to provide a recommendation as to whether a particular company’s stock should be bought or sold. When doing so, candidates should ensure that they have researched into the company beforehand and have built a good understanding of the business. This could include for instance knowledge of where the company operates; who the CEO is (and their track record); the realistic price at which stocks could be purchased (this presumably will be the current spot (market) price, which should be checked on the day of the interview); and an estimation of the price at which the stock could subsequently be sold on (based on research and assumptions).
Here are some of the considerations that could be taken into account for a stock pitch:
Macroeconomic Data: general macroeconomic data could be used to support recommendations to buy or sell. Consider for instance whether governments have decided to offer subsidies to or regulate a certain industry in a manner that could affect the revenue of market participants. However, this would not necessarily differentiate a company from competitors and could instead only indicate that the industry as a whole may provide a good (or bad) investment option. Accordingly, any macroeconomic analysis should be supplemented with more specific (micro) analysis of a particular company.
Commercial News & Reports: understanding and keeping up to date with news and developments relating to specific companies could indicate that companies’ stock prices will move in a particular direction. Consider for instance whether any M&A activity or changes in management has taken place that is likely to increase the efficiency, scope or size (and thus value) of the company; consider whether sales figures (either for that specific company or for the industry in which the company operates) give rise to any patterns, such as a steady increase in demand; consider whether any negative press, such as reports of fraud, litigation or regulatory investigation, is likely to diminish the company’s share price; consider whether the company has made any new investments which are likely to affect its future profitability (for instance investment into a new country or the development of a new product yet to be commercialised); and consider whether the company has announced plans to make any strategic changes, for instance closing down less profitable areas or improving their marketing and branding.
Metrics: it may also be a good idea to assess metrics relating to financial performance.
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By Jake Schogger - City Career Series