Numerous considerations can apply to the selection of a stock and influence decisions on the matter. As a result, the issue can be particularly complicated for a new investor who has little to no prior experience in the question. As such, it is critical that the selection process is streamlined and simplified for the benefit of such a person. Gardner and Gardner (2018) recommend that investors avoid speculating and put their money into solid, reliable businesses. A large company that is showing a trend of steady growth would be the best option due to the likelihood that the practice will continue. With this condition established, the pool of possible investments narrows substantially, streamlining the process.
There are numerous large brands in a variety of industries, all of which are potentially excellent investment options. Benzinga Insights (2012) proposes a focus on easy-to-understand stocks that represents large companies with powerful brands and strong past performance and pay out dividends. This approach rules out some companies, such as Google and many brands whose stock prices have dropped in the recent past. Overall, a small number of companies remain, out of which Walmart stands out due to its excellent overall profile. “Walmart Inc. (WMT)” (2020) shows a strong 5-year trend of continuous growth that has the company demonstrate a current stock price at almost the highest point throughout the period. As such, the stock appears to be a safe choice that is likely to generate substantial benefits for an investor.
The client, in this case, would be a family member of the author who is considering some way of making use of their money. They would be a current employee in a senior and well-paid position at a large company. Their proximity to retirement has made them begin considering investing because they want not to have to worry about their money running out during the rest of their life. They have a considerable amount of savings, but not much property beyond their house, car, and other essentials. Lastly, they would be a risk averter since their goal is to create a sustainable source of income rather than increase their capital through high-return investments.
The choice of Walmart is justified due to the expectations and interests of the prospective investor. Pinkasovitch (2019) proposes blue-chip corporations as an effective investment target for income-oriented people with low risk tolerance due to their established reputation and reliability. Walmart can be expected to grow steadily in the future, improving the value of its stock and benefiting the investor overall. Moreover, according to “WMT – Walmart Inc.” (2020), the business has been steadily, if slowly, improving its dividends per share, even if the yield has been falling with time due to the business’s quick growth. Overall, Walmart is recognizable, easy to understand, and reliable, fitting the investor’s needs excellently in this case.
The five resources used for this part can also be applied to the rest of the assignment. They are as follows:
- “Walmart Inc. (WMT)” (2020) is useful for seeing real-time data on Walmart’s performance as well as detailed statistics over its past performance.
- “WMT – Walmart Inc.” (2020) provides a more detailed look into the aspects that may be relevant to an investor and offers a way to double-check the first source’s data.
- Benzinga Insights (2012) introduces a set of essential rules for investing, regardless of one’s reason for doing so or the goal.
- Gardner and Gardner (2018) expand upon the concept with a set of paradigms that are explained in substantial detail and cover all aspects of investing.
- Lastly, Pinkasovitch (2019) discusses how one may determine their goal and gain a detailed insight into an industry as well as specific corporations when making the final choice.
References
Walmart Inc. (WMT). (2020). Web.
WMT – Walmart Inc. (2020). Web.
Benzinga Insights (2012). Six rules to follow when picking stocks [Blog post]. Web.
Gardner, T., & Gardner, D. (2018). 13 steps to investing foolishly [Blog post]. Web.
Pinkasovitch, A. (2019). How to pick a stock: Basic best practices for new investors [Blog post]. Web.