stocks trading

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Financial Management Stocks Trading

Final Project pg. 1

Guideline for Choosing Stocks to Invest

Investing in a stock market is no child's play. To make a consistent and sizable profit on themarket requires years of experience to back it up and consistently choosing the best stocks to

invest in. Even after years of worldwide economics research and thousands of books being

written on how to identify the best stocks to invest in, we are none the wiser and nobody has the

perfect formula to select best stocks to invest in! This is because there are just too manyvariables involved which control the fate of a stock. It is not possible to predict with

mathematical precision, which stock is the best to invest in, as the stock market developments

are not totally based on logic, but on human emotions, irrational apprehensions and speculation!

Therefore there is no surefire method to find the best stocks to invest in stock trading. Few

criteria worth considering are:

• Earnings growth• Recent earnings surprises

• Price/earnings ratio

• Dividends

• Market cap or size

• Industry

• Relative strength

Stock Research

you should also take a look at the company's annual report and its financial statements for the

following.

From the Income Statement:

• Earnings growth (earnings acceleration is even better). Earnings are considered by manyinvestors to be the most important single number, the assumption being that earnings pavethe way for future dividends.

• Revenue growth.

• Stable or increasing margins

• Stable or increasing R&D spending as a percentage of sales (specifically for technologycompanies).

• Tax abnormalities.

• Number of common shares outstanding. Increases in the number of shares negatively impactearnings per share (issuance of new shares isn't necessarily bad; the important consideration

is why they're doing it).




Final Project pg. 2

From the Cash Flow Statement:

• Cash flow. Ideally, cash flow should be positive, large, and increasing. In any case,understand why the company's cash flow is what it is.

From the Balance Sheet:

• Debt. The debt to equity ratio (long term debt divided by stockholder's equity) is the measuretypically used. Lower is better, and zero is ideal.

• Cash (relative to annual sales). Cash is always a good thing, but it's especially important to

companies that sometimes want or need to temporarily go cash flow negative. Rememberthat when new shares are issued, proceeds from the sale also appear here.

• Return on equity. This is a measure of net income relative to stockholder's equity. Higher isbetter.

• Receivables and inventory. They should not be rising much faster than sales are.

• Current ratio. This is the ratio of current assets (cash, receivables and inventory) to short-term liabilities. The higher the better.




Final Project pg. 3

Stocks Information:

All stocks purchased on 25

th

Feb, 2011. So price which is used in this is closing of 25

th

.

Company Closing Price (P0) No. Of Shares

Bought In 10,000Rs.

Bata Pakistan 533.30 18.75

ICI Pakistan 145.87 68.554

Siemens Pakistan 963.08 10.38

GUL Ahmed

Textile

35.23 283.848

P. S. O. 273.63 36.55

Engro Corp. 209.87 47.64

Fauji Fertilizer 112.09 89.21

Pak Suzuki 62.03 161.21

Attock Petroleum 346.15 28.889

National Ref. 261.55 38.23




Final Project pg. 4

Reasons of Investment in these Stocks:

The basic criteria behind the selection of the stocks are that I am familiar with all these stocksand have viewed the information about the stocks.

Bata Pakistan is established industry and share price if this company is increasing gradually and

Price Earnings ratio of this company is also good.

ICI Pakistan is also growing in market and share price of it also increasing. The company's

earnings per share increased to PKR 17.50 in the period under review against PKR 14.73 in the

same period a year back.

Siemens Pakistan’s shares are trading in market on high prices and repute of this company is

also good so that’s why share price is increasing. Its P/E Ratio is better than others in market.

Year over year, GUL Ahmed Textile Mills Ltd. has been able to grow revenues from 14.2B to

19.9B. Company has been able to reduce general and administrative costs from 8.64% to 7.82%.

This was a driver that led to a bottom line growth from 113.8M to 468.2M.

P. S. O., Engro Corp., Fauji Fertilizer, is those companies whose share price is increasing and

Dividend Yield of these companies is also good which create attractiveness for the investors to

invest in these companies. Downfall in shares prices is also low in these stocks.

Pak Suzuki is growing in share market due to its good image and they are maintaining their sales

which led them to increase profitability and share price is also increasing persistently.

Attock Petroleum Ltd. announced earnings results for the half year ended December 31, 2010.

The company reported sales increased to PKR 46.751 billion in the half year period in 2010

against PKR 42.875 billion in the same period in 2009. The company's profit before taxation

increased to PKR 2.390 billion in the half year period in 2010 against PKR 1.965 billion in the

same period a year back.

National Ref. is stock listed company whose share price is increasing and fluctuation in share

price from last 52 weeks is very low. Dividend Yield of National Ref. is 7.65-10 and Price

Earnings Ratio is 3.33. Company’s sales also increasing which cause increase in profitability.




Final Project pg. 5

Stocks Information:

WEEK 2 (4th Mar, 2011) Closing Price

(P0) Gain/Loss New Stocks (P0)

No. Of

Shares

566.33 619.3512095

160.69 1015.973127

977 144.5362794

35.56 93.67016747 Millat Tractors 517.45 19.50656134

281.47 286.5182911

216.29 305.9036546

119.82 689.624409

65.83 612.6068032 Pak Oilfield 316.3 33.55234525

352.93 195.868843

287.03 974.192315

WEEK 1 (25th Feb, 2011)

CompanyClosing Price

(P0) Investment

No. Of

Shares

Bata Pakistan 533.3 10000 18.75117195

ICI Pak. 145.87 10000 68.55419209

Siemens Pak. 963.08 10000 10.38335341

GUL Ahmed

Tex. 35.23 10000 283.8489923

P. S. O. 273.63 10000 36.5457004

Engro Corp. 209.87 10000 47.64854434

Fauji Fert. 112.09 10000 89.21402444

Pak Suzuki 62.03 10000 161.2123166

Attock Pet. 346.15 10000 28.88920988

National Ref. 261.55 10000 38.23360734




Final Project pg. 6

Stocks Selling & Purchasing Information:

I have purchased 2 new stocks Millat Tractors and Pak Oilfield in place of Gul Ahmad

Textile and Pak Suzuki respectively. Share price of all stocks rise but rise in prices of these

stocks were low as compared to other stocks so this is main reason due to which I sold these

stocks.

Reasons for purchasing new Stocks:

Millat Tractors and Pak Oilfield are those companies whose share price is increasing and


invest in these companies. Downfall during last 52 weeks in shares prices is also low in these

stocks. So these are some reasons for which I have chosen these stocks.




Final Project pg. 7

Stocks Information:

S1 WEEK 3 (11th Mar, 2011) Company Investment No. Of Shares Closing Price (P0) Gain/Loss

Bata Pakistan 10619.35121 18.75117195 531.33 -656.2910182

ICI Pak. 11015.97313 68.55419209 158.65 -139.8505519

Siemens Pak. 10144.53628 10.38335341 975 -20.76670682

Millat Tractors 10093.67017 19.50656134 541.63 471.6686533

P. S. O. 10286.51829 36.5457004 285.21 136.6809195

Engro Corp. 10305.90365 47.64854434 234.84 883.8804975

Fauji Fert. 10689.62441 89.21402444 133.13 1187.438665

Pak Oilfield 10612.6068 33.55234525 322.29 200.9785481

Attock Pet. 10195.86884 28.88920988 361.99 261.7362415

National Ref. 10974.19232 38.23360734 292.93 225.5782833

WEEK 3 Purchases

New Stocks (P0) No. Of Shares

Nishat Mills 64.52 154.4181679

D.G. Khan Ce. 25.04 434.3499431




Final Project pg. 8

Stocks Information:

WEEK 4 (18th Mar, 2011) Company Investment No. Of Shares Closing Price (P0) Gain/Loss

Nishat Mills 9963.060191 154.4181679 64.67 23.16272518

D.G. Khan Ce. 10876.12257 434.3499431 23.66 -599.4029215

Siemens Pak. 10123.76957 10.38335341 975 0

Millat Tractors 10565.33882 19.50656134 517.05 -479.4712778

P. S. O. 10423.19921 36.5457004 280.44 -174.3229909

Engro Corp. 11189.78415 47.64854434 199.11 -1702.482489

Fauji Fert. 11877.06307 89.21402444 130.01 -278.3477563

Pak Oilfield 10813.58535 33.55234525 322.4 3.690757978

Attock Pet. 10457.60508 28.88920988 351.02 -316.9146324

National Ref. 11199.7706 38.23360734 291.52 -53.90938635

WEEK 4 Purchases


Pak Cables 53 191.0145202

Cherat Paper 51.5 184.2194498




Final Project pg. 9


I have purchased 2 new stocks Pak Cables and Cherat Paper in place of Siemens Pakistan and

Engro Corporation respectively. Share price of all stocks fall to some extent but fall in prices of

these stocks were high as compared to other stocks so this is main reason due to which I sold

these stocks.


Cherat Paper and Pak Cables are those companies whose share price is increasing and


invest in these companies. Downfall during last 52 weeks in shares prices is also low in these

stocks. So these are some reasons for which I have chosen these stocks.




Final Project pg. 10

Stocks Information:

WEEK 5 (25th Mar, 2011)

Company Investment No. Of Shares Closing Price (P0) Gain/Loss

Nishat Mills 9986.222916 154.4181679 63.96 -109.6368992

D.G. Khan Ce. 10276.71965 434.3499431 23.81 65.15249146

Pak Cables 10123.76957 191.0145202 52 -191.0145202

Millat Tractors 10085.86754 19.50656134 510.76 -122.6962709

P. S. O. 10248.87622 36.5457004 276.63 -139.2391185Cherat Paper 9487.301663 184.2194498 48.6 -534.2364043

Fauji Fert. 11598.71532 89.21402444 129.64 -33.00918904

Pak Oilfield 10817.27611 33.55234525 322.01 -13.08541465

Attock Pet. 10140.69045 28.88920988 353.72 78.00086668

National Ref. 11145.86121 38.23360734 286.5 -191.9327089

WEEK 5 Purchases


Exide (PAK) 183 54.44355886

Indus Dyeing 313.54 28.55477852






I have purchased 2 new stocks Exide Pakistan and Indus Dyeing in place of Millat Tractors

and Cherat Paper respectively. Share price of all stocks fall to some extent but fall in prices of

these stocks were high as compared to other stocks so this is main reason due to which I soldthese stocks.


Exide Pakistan and Indus Dyeing are those companies whose share price is increasing and


invest in these companies. Although there is downfall in share prices of these stocks but that

downfall is low as others in market so a persistent decrement and increment in prices are more

preferable than great fluctuations.





Stocks Information:

WEEK 6 (1st Apr, 2011)


Nishat Mills 9876.586017 154.4181679 64.99 159.0507129

D.G. Khan Ce. 10341.87214 434.3499431 25.73 833.9518907

Pak Cables 9932.755052 191.0145202 53 191.0145202

Exide (PAK) 9963.171272 54.44355886 193.41 566.7574478

P. S. O. 10109.6371 36.5457004 277.51 32.16021635Indus Dyeing 8953.065259 28.55477852 309 -129.6386945

Fauji Fert. 11565.70613 89.21402444 137.88 735.1235614

Pak Oilfield 10804.19069 33.55234525 325.09 103.3412234

Attock Pet. 10218.69132 28.88920988 367.1 386.5376282

National Ref. 10953.9285 38.23360734 311.42 952.7814949

WEEK 6 Purchases


Atlas Honda 141.75 71.54707102

Siemens Pak. 1051 8.395267901






I have purchased 2 new stocks Atlas Honda and Siemens Pak. in place of P. S. O. and

Indus dyeing respectively. Share price of all stocks fall to some extent but fall in prices of

these stocks were high as compared to other stocks so this is main reason due to which I sold

these stocks.


Atlas Honda and Siemens Pak. are those companies whose share price is increasing and


invest in these companies. Earnings per share of these two companies are also good that’s why I

have chosen these stocks. Downfall of last weeks is also low.





Stocks Information:

WEEK 7 (8th Apr, 2011)


Nishat Mills 10035.63673 154.4181679 63.8 -183.7576198

D.G. Khan Ce. 11175.82404 434.3499431 26.12 169.3964778

Pak Cables 10123.76957 191.0145202 52.52 -91.68696971

Exide (PAK) 10529.92872 54.44355886 193.01 -21.77742355

Atlas Honda 10141.79732 71.54707102 140.15 -114.4753136

Siemens Pak. 8823.426564 8.395267901 1051 0

Fauji Fert. 12300.82969 89.21402444 137.88 0

Pak Oilfield 10907.53192 33.55234525 322.55 -85.22295694

Attock Pet. 10605.22895 28.88920988 368.38 36.97818865

National Ref. 11906.71 38.23360734 324.69 507.3599694

WEEK 7 Purchases


Pak Engg. 95.2 103.4861251

Clariant Pak 141.5 70.86446646





Stocks Information:

WEEK 8 (15th Apr, 2011) Company Investment No. Of Shares Closing Price (P0) Gain/Loss

Pak Engg. 9851.87911 103.4861251 99.7 465.687563

D.G. Khan Ce. 11345.22051 434.3499431 24.39 -751.4254015

Pak Cables 10032.0826 191.0145202 53.7 225.3971339

Exide (PAK) 10508.1513 54.44355886 194.77 95.8206636

Clariant Pak 10027.322 70.86446646 144.96 245.1910539

Siemens Pak. 8823.426564 8.395267901 1064 109.1384827

Fauji Fert. 12300.82969 89.21402444 138.71 74.04764029

Pak Oilfield 10822.30896 33.55234525 322.73 6.039422145

Attock Pet. 10642.20714 28.88920988 363.88 -130.0014445

National Ref. 12414.06997 38.23360734 319.81 -186.5800038

WEEK 8 Purchases


Tri-Pack Films 150.81 70.24597249

Rafhan Maize 2455.46 4.177416752





Stocks Information:

WEEK 9 (15th Apr, 2011) S2 Company Investment No. Of Shares Closing Price (P0) Gain/Loss

Pak Engg. 10317.56667 103.4861251 99.84 14.48805752

Tri-Pack Films 10593.79511 70.24597249 153.51 189.6641257

Rafhan Maize 10257.47974 4.177416752 2561.55 443.1821432

Exide (PAK) 10603.97196 54.44355886 194 -41.92154033

Clariant Pak 10272.51306 70.86446646 144.95 -0.708644665

Siemens Pak. 8932.565047 8.395267901 1075 92.34794691

Fauji Fert. 12374.87733 89.21402444 139.89 105.2725488

Pak Oilfield 10828.34838 33.55234525 326.72 133.8738576

Attock Pet. 10512.20569 28.88920988 375.81 344.6482739

National Ref. 12227.48996 38.23360734 332.47 484.0374689

WEEK 9 PurchasesNew Stocks (P0) No. Of Shares

Colgate Palm. 681.43 15.49983185

Bata (Pak) 467.92 21.95205252






Stocks which I sold the reason behind these selling are downfall in share prices of these stocks.

There was a downfall in prices all stocks of that are registered in Karachi Stocks Exchange

during last two or three weeks but the prices of stocks that I sold gone down speedily.

New stocks chosen were based on their past performance. Earnings per Shares of these stocks

were high and downfall in last 52 weeks was also low. Dividend yield of new selected stocks is

also good and these companies stocks are growing in market. This creates attractiveness for the

investors to invest in these companies.





Stocks Information:

WEEK 10 (29th Apr, 2011)


Pak Engg. 10332.05473 103.4861251 100.99 119.0090439

Tri-Pack Films 10783.45924 70.24597249 166.06 881.5869548

Rafhan Maize 10700.66188 4.177416752 2744.4 763.840653

Colgate Palm. 10562.05042 15.49983185 699.93 286.7468893

Bata (Pak) 10271.80441 21.95205252 459.12 -193.1780621

Siemens Pak. 9024.912994 8.395267901 1067.5 -62.96450926

Fauji Fert. 12480.14988 89.21402444 141.27 123.1153537

Pak Oilfield 10962.22224 33.55234525 325.59 -37.91415013

Attock Pet. 10856.85397 28.88920988 376.37 16.17795753

National Ref. 12711.52743 38.23360734 349.8 662.5884152

WEEK 10 Purchases


Ghazi Tractors 214.01 47.09418416

I.C.I 154.91 57.85261432





Reasons of stocks replacement:

Two new stocks with which I replaced the older ones is because the older stocks was not

generating profit and rating of new companies is going these days. Companies are providing

more and more investing opportunities. P/E ratio is also good. These companies financial

position is strong as compared to others in same industry, this create attraction for the investors.





Stocks Information:

WEEK 11 (6th May, 2011)


Pak Engg. 10451.06377 103.4861251 104 311.4932366

Tri-Pack Films 11665.04619 70.24597249 164.75 -92.02222397

Rafhan Maize 11464.50253 4.177416752 2702.3 -175.8692452

Colgate Palm. 10848.79731 15.49983185 729.82 463.2899741

Ghazi Tractors 10078.62635 47.09418416 226.38 582.555058I.C.I 8961.948484 57.85261432 153 -110.4984934

Fauji Fert. 12603.26523 89.21402444 139.02 -200.731555

Pak Oilfield 10924.30809 33.55234525 326.1 17.11169608

Attock Pet. 10873.03192 28.88920988 379.06 77.71197458

National Ref. 13374.11585 38.23360734 340.43 -358.2489008

WEEK 11 Purchases


Sui Northern 17.91 646.1766593

Nishat Power 16.68 530.6624695





Stocks Information:

This is last week so I sold all my stocks on May 13, 2011 by the closing price of this day.

WEEK 12 (13th May, 2011)


Pak Engg. 10762.55701 103.4861251 94 -1034.861251

Sui Northern 11573.02397 646.1766593 18.2 187.3912312

Rafhan Maize 11288.63329 4.177416752 2778.78 319.4888332

Colgate Palm. 11312.08728 15.49983185 746.53 259.0021903

Ghazi Tractors 10661.18141 47.09418416 224.45 -90.89177542

Nishat Power 8851.449991 530.6624695 16.86 95.51924451

Fauji Fert. 12402.53368 89.21402444 141.21 195.3787135

Pak Oilfield 10941.41979 33.55234525 326.17 2.348664168

Attock Pet. 10950.7439 28.88920988 374.96 -118.4457605

National Ref. 13015.86695 38.23360734 329.88 -403.3645574





Gain / Loss (May 13, 2011)

After operating 12 weeks in stock market the overall gain or loss on initial investment is givenbelow:

Overall Gain / Loss (13th May, 2011) Stocks Purchased Initial Investment Finally Sold Earnings Net Gain/Loss

Bata Pakistan 10000 Pak Engg. 9727.69576 -272.3042397

ICI Pak. 10000 Sui Northern 11760.4152 1760.4152

Siemens Pak. 10000 Rafhan Maize 11608.12212 1608.122121

GUL Ahmed Tex. 10000 Colgate Palm. 11571.08947 1571.089473P. S. O. 10000 Ghazi Tractors 10570.28963 570.2896336

Engro Corp. 10000 Nishat Power 8946.969236 -1053.030764

Fauji Fert. 10000 Fauji Fert. 12597.91239 2597.912392

Pak Suzuki 10000 Pak Oilfield 10943.76845 943.7684508

Attock Pet. 10000 Attock Pet. 10832.29814 832.2981366

National Ref. 10000 National Ref. 12612.50239 2612.50239

Total 100000 111171.0628 11171.06279

During these 12 weeks I have purchased and sold many stocks. Old stocks which were cause of

loss replaced with newer ones so that profit can be generated. At the end of week 12 net gain was

on initial investment of 100000 is 11171.06279.





Return on Revenue:

A meausre of coporation profitability calculated as net income divided by revenue.

Finally Sold Net Gain/Loss ROR

Pak Engg. -272.3042397 -2.723042397

Sui Northern 1760.4152 17.604152

Rafhan Maize 1608.122121 16.08122121

Colgate Palm. 1571.089473 15.71089473

Ghazi Tractors 570.2896336 5.702896336

Nishat Power -1053.030764 -10.53030764

Fauji Fert. 2597.912392 25.97912392

Pak Oilfield 943.7684508 9.437684508

Attock Pet. 832.2981366 8.322981366

National Ref. 2612.50239 26.1250239

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