Was asked this question recently in an interview and it seems to be a popular interview question. I feel that I answered the question pretty well doing a good amount of research on the company a few months before. After the interview I started to think..what did I leave out?
Here are some of the things I included:
- What drives their revenues
- outlook on their most profitable products (long term)
- how the market for their products look in the short term
- the stock's performance over the past year
What else should I have included?
Stock Pitch Interview
A stock pitch should be a short and clear thesis on a particular stock. The information should be presented in 3 to 5 minutes . Additionally, information should be presented in an original fashion.
Certified user @JackandDaniels outlines what good stock pitch should contain.
- How the company makes money - they may have 3-4 segments but maybe only 1-2 matters. You want to be able to explain how company X makes money such that a third grader understands it.
- Company positioning / market outlook / quality of business - grow faster or slower than market? Barriers to entry?
- What is consensus expecting but more importantly need to understand how you are differentiated
- Your catalyst to realize the above point
- Key risks
- Company X valuation and comps valuation; should know what these both trades for on average historically. Maybe the entire sector has re-rated BC it's a staples company and investors are looking for dvd yield.
- Upside / downside scenarios and returns. You should have your 2-3 assumptions for each scenario to bridge how you got there ie sales up 10% and margins +150 bps gets to $X / share by 17e
That's the pitch. It should be 3-5 min. I don't care about price or what exchange it's on. People are going to care about the thesis and if its liquid. So if you're interviewing @ Greenlight, don't pitch a company that trades
Having an idea that is different from the consensus is important. Certified user @Rags to Hermes, an equity research analyst, points out why.
Alpha is generated from having a different view from consensus and being right about it. If you spit out all the same drivers that you saw in an article from Zacks explaining why it is a strong buy, then you missed the boat.
Example: Everyone know Starbucks has good fundamentals and that is growing. You need to explain why it will grow either less or more than consensus is predicting and why it is not reflected in the current price.
If you want a more detailed overview of how to put together a stock pitch - check out the WSO guide here.
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