AbstractWhy Investing in Companies That Consistently Deliver Affordable Products to Consumers Is Worthwhile
Anna McCasland, C’23
Dr. Huarui Jing, Assistant Professor of Finance
Department of Economics and Finance: The University of the South
It is a common assumption that high-growth stocks are the best options for short-term investment periods. Given the tumultuous macroeconomic events that have occurred over the past few years including COVID-19 pressures, inflation struggles, global conflicts, and beyond, it is important to take advantage of areas in the market where there is relative constancy and security. Through observing big-picture trends, I have seen the recurring trend of companies with large consumer loyalties in the retail sector remaining resilient in the wake of recent macroeconomic pressures. In multiple cases, this loyalty stems from the ability of leading retail companies to keep prices low for their customers. Therefore, the aim of my presentation is to illustrate why companies focused on delivering affordable consumer products are healthy investments. To test my argument, I will center my analysis on Walmart and its partner companies since Walmart’s main mission is to guarantee low prices for consumers. Besides Walmart, I will explore the performances of J.B. Hunt (JBHT), Tyson (TSN), General Mills (GIS), Proctor and Gamble (PG), Hewlett-Packard (HPQ), Roku (ROKU), Techtronic Industries (TTNDY), Green Dot (GDOT), and Plug Power Inc. (PLUG). Through employing the diversification effect, I will narrow my analysis by shrinking my portfolio down to five stocks. Then, I will apply the Portfolio Theory Model, Capital Asset Pricing Model, and Chen Roll Ross Model to look at the health of this portfolio from different angles. By the end of my presentation, I will reveal the investment structure that proves to be the best illustration of portfolio optimization under the scenario of tracking these stocks from January 17th to April 12th and investing $1 million into the stock market.