As a stock portfolio manager, you spend most of your day searching for stocks which appear to be undervalued. In the last few days, you have received information about two stocks that you are assessing, Olympic stock and Kenner stock. Many stock analysts believe that these stocks are undervalued because their price-earnings ratios are lower than the industry average. Olympic, Inc. has a PE ratio of 6 versus an industry PE ratio of 8. Recently, its stock price declined in response to an announcement that its quarterly earnings would be lower than expected, because of expenses from recent restructuring.

The restructuring is expected to improve Olympic's future performance, but its earnings will take a large one-time hit this quarter. Kenner Company has a PE ratio of 9 versus a PE ratio of 11 in its industry. Its earnings have been decent in recent years, but it has not kept up with new technology and may lose market share to competitors in the future.

 

Read the integrative problem above and respond to the following: PLEASE PROVIED INTRODUCTION, CONCLUSION AND REFERENCES. 

• 1) Identify and describe at least two additional factors or indicators that you would want to know about before deciding whether or not to buy the Olympic stock? Please justify your rationale.
• 2) Identify and describe at least two additional factors or indicators that you would want to know about before deciding whether or not to buy the Kenner stock? Please justify your rationale.

Answer rating: 100% (QA)

IntroductionInvestors and portfolio managers are constantly searching for undervalued stocks to buy and hold for the long term In this integrative problem we are presented with two stocks Olympic stoc... View the full answer