Pitch me a stock - Suggestions?
While I understand how to prepare for this quesiton, I was wondering what kind of stocks I should focus on when interviewing for a SA position? Is something like AMZN too blue-chip? You guys have any suggestions? Everything I've been following lately is red due to the general state of the economy...
"Bank of America. Paulson bought it and he's smarter than you."
"The Ultra-short financial ETF. What? You mean we're not going bankrupt if Europe goes under?"
In all seriousness, this is a stock pitch you should have ready and should really come up with on my own. Being an engineer, I was obsessed with oil companies and their fundamental metrics so it was fairly straightforward for me. We'll be able to tell if someone else gave you the idea.
Find something where economic cause and effect should have made a stock price go up but it went down instead because the guy on the other side of the transaction is selling for a dumb reason. As I was watching natural gas pipeline MLPs (which have the fundamentals of a very boring regulated utility) plummet faster than the market in early 2009 as the hedge funds cashed out, I would always joke with my friends on the floor, "FLIGHT FROM SAFETY! I'm terrified of losing money so I'll sell this safe, boring utility and buy a bank!"
Alright thanks for your input on that. I mostly follow tech companies (being young and all I guess that's what I can relate to most). I guess I'll just look for something that is underpriced due to market conditions rather than due to their fundamental business.
So you would only pitch a stock that's already doing well? With a one year horizon, your logic is buy high...sell...higher? How about buying on macro related weakness when intra-index correlation is high and the company's fundamentals are strong? I don't think you really "understand".
a tech that is underpriced???
pitch them grpn and see what they say...
Whatever you choose, just make sure you're prepared to explain your logic and reasoning when they try to cross-examine you. Anticipate that they'll ask about some other metric that may not reflect so positively on it. The point is not necessarily to be right, but to show that you know how to evaluate an investment.
Thanks for your advice In The Flesh.
I'm not claiming to be the next Buffett guys.. if I were I wouldn't be here asking. And the portion of my question that remains unanswered is what size market cap should I be looking at? Thinking of looking into Canadian oil producers and I'm wondering what size players I should investigate on.
I think that depends on the company you're interviewing for.
Do they even ask for stock pitches anymore? I dont see how as an undergrad you can ever answer this question intelligently without doing a full valution on the firm...At the end of the day you wanna pitch something that undervalued, not necessarily a growth company.
if you do want a growth..techs are pretty easy...CRN is one
Flake, the goal is not to buy high, sell higher. It is to trade against sentiment; to be on the other side of an irrational trade. Find a stupid reason for a stock to go down. Mine was UPS reporting bad earnings off of energy costs sending Burlington Northern down 5% in a single day back in 2006. Anyone who understands how a railroad works- having an engine using 5x the gasoline as a truck pull the equivalent of 50 semis- knows that they use less energy than UPS's aircraft and trucks and in fact benefit from MORE business when trucks start charging more. Interviewers loved that pick.
Figure out where the most irrational investors are selling their stock, ideally in an industry that you understand the fundamentals of. Maybe it is in Europe. Then pick the cheapest company that's well-managed and has a healthy balance sheet.
That's not what I was saying lol.
WWE. The Rock is back and can beat up John Cena.
fmcn
Like a poster said above, its about your ability to explain it. Pick whatever you're already familiar with, then research it to death.
Interview Question - What stock do you pitch? (Originally Posted: 01/07/2009)
When asked what stocks do you follow/pitch a stock what stocks would you talk about?
I would talk about a stock that I follow or a stock that I could pitch.
The whole point of the question is to make sure you follow the markets and are able to reason why you think a stock is worth buying. There's no one specific answer.
just read a couple industry reports about a certain industry that you may be slightly iterested in be it, tech, healthcare, consumer products, financials, tobacco whatever and then read a couple research reports about 3 or 4 stocks within that industry. you can get all this info online for free
Pitching Stocks in Interviews (Originally Posted: 02/13/2011)
Hi, first time poster long time reader here.
I have an interview for an internship coming up (not FT or junior SA) at a BB and I have been searching for information on how to properly pitch a stock if asked during an interview. I found a couple threads here and there but none satisfactory.
As someone who does not trade/invest due to lack of funds and therefore does not follow any specific stocks, most of my half baked ideas for places to look come from following market news and macro trends.
I'd like to pitch stocks in energy, tech, commodities, or other sectors showing large growth or M&A activity. I highly doubt they're looking for any serious in depth stock valuations and analysis, but I'd like to be able to sound educated talking about the stock and why I am pitching it.
My questions are: 1) Where to look?
2) How to pick? Where is a good place to find industry and stock analysis reports? 3) How to pitch? Do I mention P/E ratios or comment on the industry as a whole, etc.? An example would be appreciated.
P.S. Found a user that posted a guide not too long ago that posted a link for downloading it, link is not active. Just an aside if you're that user.
Thanks in advance for assisting a young monkey.
I have been through a ton of SA interviews and basically what worked for me has been talking about Market Cap, Revenue, P/E ratios, EPS and a GREAT story behind the stock. These numbers I found on Yahoo! Finance or WSJ.com Nothing too crazy but it seems to work for ME.
+++Don't let the numbers make the story, use the numbers/data as a supporting factor :) Good luck bro!
Agreed. Spitting out number after number in an interview for an internship is asking to grilled. Unless you really do know a lot about the company and can field a technical question, focus on telling a good story and selling them on why the COMPANY will continue to expand, not how the P/E is at a 7 month low. Of course, throw in some numbers to back up your pitch.
Also might be good to look at who is buying (insiders, money managers with proven track record). Never hurts to piggy back on successful investors and for a young guy like yourself, it would show that you are looking to learn from those with more experience.
Also, if you are going to pitch an energy company I would familiarize myself with the current geo-political situation. Approx. how many b/d certain regions/countries are producing (particularly those in troubles regions) and where excess supply might come from.
I think the inclusion of some sort of simple and logical back-of-the-envelope valuation is what makes you stand out on a pitch. Anyone can read about a macro trend in the newspaper and realize which industries will do well- you want to pitch them a specific stock and show it's undervalued.
My go-to for a while was an oil@gas company. I would say "well it's trading at $20 per share and has $24 of proven reserves per share, which should be a floor, as you get their unproven reserves for free at that price. XX company bought a portion of these unproven reserves for $XX, valuing them at $XX per mcfe, which values the entire section of unproven reserves at $XX, or $15 per share. So I see $24 as the downside and $39 as the upside."
So keep it simple but include some sort of valuation.
If you can produce something like the example given by makers mark then that is probably the best thing to do for a fundamental stock pitch.
It hits the two key criteria: 1) Simple/Easy to explain 2) Shows you know something/done personal research
thanks for the hat tip i re-uploaded it here:
http://www.wallstreetoasis.com/forums/a-short-stock-pitch-guide
on a side note, i would not recommend using the guide if you're just trying to prepare for a 'do you follow a stock?' question during an ib interview
just stay up to date with recent stories and developments, recent stock price history, P/E & EPS, and you should be more than fine. it will never go deeper than that unless you're interviewing for a position in a HF
See other post!
Thanks for all the thoughtful insight everyone. Unfortunately this site would not publish my post until now despite writing this weeks ago so I didn't get any of the advice for the interview.
I ended up making a value pitch, mentioned a few numbers but went mostly with a qualitative approach, the "good story" method. It was for a frosh/soph IBD internship so I doubt they were looking for anything too deep. Ended up nailing the interviews and just received an offer a few hours ago!
yeah just make sure it has a cool story/product and stick to SWOT, its an organized and effective way to present a stock
Sourcing ideas for stock pitches (Originally Posted: 04/20/2014)
There has been a lot of articles written on here about what makes a good stock pitch in an interview, but I haven't been able to find anything about how to choose the company that you are pitching. For instance, I find lots of my investment ideas from reading write-ups from other investors (Kerrisdale, VIC, Whopper, Seeking Alpha, etc.). Obviously, copying someone else's idea isn't going to impress anyone, but it can be a good place to begin your own research. Does your stock pitch need to be completely original, and if not, is it important to explain who you originally got the idea from?
Well I come up with my own ideas but I base it off of specific "sectors." Or special situations. I'm not going to say what I like doing for my best ideas but for example you might look at potential takeover candidates - http://etfdb.com/type/alternatives/merger-arbitrage/
Look at ETFs that target a specific area and dig into that ETF. For example low PE ETFs (barclays CAPE etf)
1) Pick a SMID cap so it's less likely the interviewer knows it well. 2) Choose a sector that you're generally knowledgeable about. This will limit the chance that you end up looking stupid. 3) Find a stock that has 75+% neutral or sell ratings from the sell side. Try to poke holes in the groupthink or sentiment that makes the stock so hated.
All of the above will show that you have original ideas, can think independently and aren't afraid to go against consensus. That's what interviewers want to see.
If you can speak to the idea extremely intelligently and be able to answer every single question the interviewer throws at you, does it really matter? Not saying this gives you grounds to pitch AAPL, or FB, or some other name CNBC seems to be transfixed by every day. I'm just wondering whether it really matters whether you pick a small-cap or mega-cap as long as your thesis is solid.
Just saw these responses. Thanks for the ideas!
How do You select the stocks you pitch (Originally Posted: 04/21/2015)
Hello everyone, I am a fairly new monkey in this jungle and need your help in adapting. I am interested in investing and investment banking career, however, a major road block for me is picking a stock to do research and do analysis on. While many of you may recommend to select an industry and pick any company from there, I respect your suggestion but I want to know whether the stocks that YOU ALL end up researching and analyzing has a particular appeal than others.
How do you get interested in a stock? Is there a particular way you all approach this. Each industry has tens and thousands of stock but what makes you pick a stock as THE STOCK ?
please feel free to start from scratch: your mind set, and every miniscule thing that you do to prepare for a stock pitch. I am fairly new so everything you contribute will be helpful for me.
I am not a professional investor (very far from it), and given that, my method is likely very different (and in some ways probably objectively worse) than how a hedge fund professional goes about sourcing investment ideas. Having said that, I can still outline the general process I take:
Initial Qualitative Screen - This step consists of using a variety of qualitative factors that will rule out a ton of stocks. These factors will vary from person to person, but some that matter for me are the company is in a geography that I understand (domestically headquartered companies only), I FULLY understand how companies in the space make money (eliminates mining& metals, maritime shipping, and to some extent banks), I have a good understanding of the industry dynamics (narrows me down to technology, healthcare, consumer/retail, and media companies).
Basic Quantitative Screen - I then narrow the universe of companies based on a variety of factors related to valuation, profitability, and size of the company. For example, I might automatically reject all companies that are not profitable, eliminate all companies trading at more than 500% of the LTM P/E of their peer group, and eliminate all companies with a Market Cap of less than $500 million. It's not that companies that are bleeding cash, very small companies, or richly valued companies based on traditional methods are always poor investments, it is just that I personally am not as confident in my ability to analyze them very well. Invest in what you know.
Initial Diligence - Based on the companies that remain, I will do a quick search of the news surrounding the company (management changes, potential M&A scenarios, big contracts up for renewal if the company is primarily B2B). Any news that I don't understand about a company or any news that scares me given my risk profile, I'll eliminate the company. Any company with interesting news or that concerns potential near-term catalysts, I'll pursue.
Learn The Business (10-k) - Any companies that caught my eye positively in the step above moves to the top of my list. At this point I will pull up the most recent annual report of the company and read it front to back. In my own (maybe not totally qualified opinion), this step is the most important. If I am being truly diligent (which I am not always), then I will not invest in a company without reading the entire 10-k to understand EXACTLY what the company does, how it does it, and what its biggest threats and opportunities are, etc.
Valuation - This is pretty free form, but if I like a company after reading the 10-k, I will run a DCF (if I have any degree of confidence in my projections) and look at trading comps for the peer group bearing in mind which ratios are most fitting and representative in the space. If my analysis shows that the security is underpriced (or even if it is priced fairly but I think investor sentiment / momentum could drive it up), I will continue to the last step.
Look for short term catalysts. So I understand the company inside and out, I like it, and I think it is undervalued. The next question is "When will the price go up and why?". For this it is helpful to understand common catalysts in the space, which is why I focus on a limited number of sectors and company size. Is the company a hot target for activists or a strategic acquirer? When is the earnings report and do I have any reason to believe they will beat? etc., etc.
Again, this is not coming from the perspective of someone who invests in stocks professionally, but rather from someone who is looking to several years from now. My steps are probably less extensive than what you would see from people who do this professionally, but I would like to believe that I do a lot more work than your average guy who picks stocks and I also know that the system works for me.
thank you very much. it was pleasant to read your feedback
What stock to Pitch in an interview (Originally Posted: 07/24/2015)
So I've read multiple posts/articles about how pitching a stock that is covered by the person that you are being interviewed by is generally a no-no unless you think you can do it really well and have actually done your homework (meaning you either impress them and show you have a genuine understanding or you just look dumb in front of an expert). BUT when faced with the question "are there any stocks you would recommend?" could asking them whether they would like to hear about one in their sector or not be a decent idea? or would this generally be seen as you having a lack of confidence?
I would say that I recommend no stocks at this time, stay in cash until the market crashes and then tell them what stock you would buy at that time.
This applies for equity research and trading only; IMO don't pick a popular domestic company, especially if the firm has coverage with the team you are interviewing with. Otherwise you are giving us permission to essentially grill you on something you might have only spent a few weeks learning about which we have been covering for months. If you do get this question the wrong answer is the one you don't defend.
Tips for Stock Pitch Competition? (Originally Posted: 10/28/2015)
Things I should do, and things I shouldn't?
What's the context? Is it a student competition?
Coming up with stock pitches for interviews (Originally Posted: 11/13/2015)
AA
Simple story e.g. for financials - Greenhill not JPM . 13fs. pressed for time? - read sell-side initiations and just rip thesis/key facts. long term holders usually - keep in mind. 2 minutes. have 3. Will ask investment philosophy - you probably dont have one. google "The T. Rowe Price Approach to Investing in Growth Stocks" - and copy find similar one if value. modeling test. annual. simple - bare minimum - no 9000 drivers. DCF easiest - multiples have to explain - can get complicated if you dont know what you are doing.
Why not use proper grammar?
Be able to present your thesis with key points in a few sentences please. Be able to justify your thesis with whichever philosophy you choose. Also be able to talk about risks related to your thesis.
You don't have to be so elaborate as to have run your own DCF, but you should be able to back up your arguments with numbers. Have one buy and one sell recommendation ready, to be flexible. Also, your best bet would be to pick a company that's big in its industry, but isn't big enough that everyone knows a lot about it. So don't go for the Apples and Googles of the industries you're looking at, but talk about companies that are making significant innovations or contributions to their industries.
A ullam ipsa laudantium voluptas voluptatem repellendus dolores. Quasi quam est earum officiis ea quia. Nulla quos quia voluptatum. Facere mollitia asperiores atque est magni autem corporis id.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...
Omnis eveniet corporis dolor blanditiis atque. Itaque ipsa eum esse facilis. Maxime mollitia asperiores aut in ex. Ipsa quae error impedit non maiores.
Repellendus assumenda sed et architecto. Asperiores est qui tempora ut. Non dignissimos omnis et molestiae veritatis et nostrum.
Voluptatem iure quas et eum eum nemo quam. Labore consequatur eum iusto qui qui qui. Debitis blanditiis velit alias quis. Enim maxime exercitationem ex iste est aut optio. Explicabo velit facere laboriosam minus omnis sunt natus.
Beatae ea quibusdam ducimus. Quibusdam quae explicabo numquam voluptates et rerum. Eos voluptatem magni reprehenderit non. At sequi dolorem molestiae sapiente minima eius dolor. Unde vitae natus aut quo. Deleniti iure nihil voluptatem illo repudiandae.