Introduction
Large corporations are not owned by individuals. Instead, the corporations are split up into stocks which are then sold to willing buyers in the stock markets where the stocks are assigned unique stock symbols for trading. The prices of the stocks are very volatile. The volatility is due to the sensitivity of stock prices to happenings in both the external and internal environment. Generally, the company that should be included in an investor’s portfolio should have a high P/E ratio. The P/E ratio describes what the investor is expected to pay for the stocks compared to what he is expected to earn. The companies selected for this paper are all involved in the technological world. These companies include Microsoft Corporation, Amazon, Alphabet Inc., Apple Inc., and Facebook Inc. From the analysis, it is possible to determine which company is best to buy shares from and which stock position the investor should take.
Analysis of the companies
Microsoft
Microsoft’s stock symbol is the market is MSFT. The company’s current previous close value for the stocks is $182.92. However, Microsoft Corporation aims to hit a previous close of $200 within one year. The company is one of the most popular software companies mainly famed for the Office Software and Windows Operating System. The values of the stocks for Microsoft Corporation have an upward trend. The company has been kept at the top by consumers’ loyalty to the brand coupled with its reputations and easily usable software. The corporation also boasts a strong distribution channel and has recently acquired SKYPE which has helped diversify its products. However, the corporation has been plagued by bad publicity due to criticism over security flaws and their slow pace in innovation efforts. Buying stocks from Microsoft Corporation is highly recommended.
Amazon
Amazon is currently one of the largest online retailers. Amazon serves consumers all over the world. Amazon mainly provides retail services, internet services and sells consumer electronics. The stock symbol for Amazon in the market is AMZN. The prices of the stocks in the market has an upward trajectory. The current close of the corporation is valued at $2460 but is expected to increase to $2700 in one year. Amazon stands out due to its large pool of merchandise for consumers to select from and the ability to buy from a large number of easily available third-party sellers. At Amazon, the different departments offering different services interact allowing them to reinforce each other. Amazon’s entrance into the market in developing countries has been limited implying that new markets are not explored and exploited in these countries. The purchase of stocks from Amazon is not recommended due to the high volatility.
Alphabet Inc.
Google Inc. is under the umbrella of Alphabet Inc. Google Inc. is the largest business in the umbrella. The corporation is mainly involved in the provision of internet services, producing consumer electronics and computer software. Alphabet Inc. has also ventured into the provision of health care. Alphabet Inc. stock symbol in the market is GOOGL. The corporation is worldwide. The prices of the stocks show high volatility. The corporation’s previous close has a value of $1,414.30 which the company aims to increase to a value of about $1,500.00 within one year. The main service offered by the corporation is the google web search. It is one of the most widely used search engines all over the world. Lack of transparency on how their search engines operate has been a sticking issue for the company coupled with the heavy reliance on advertisements for revenue generation. The purchase of shares for Alphabet Inc. is highly recommended.
Apple Inc.
Apple products are some of the most unique in the technological world. The corporation deals in computer hardware, software, provision of internet services and production of consumer electronics. The corporation’s current close is valued at $322.32 but it is expected to be valued at about $335.00 within the next one year. The stock prices for apple Inc. are very volatile but have an upward trend. Apple Inc. produces innovative products. Marketing activities undertaken by Apple have also been very successful in increasing their already big and recognizable brand. The corporation activities have induced customer loyalty expanding the corporation’s customer base. However, due to the large brand, the corporation is expected to match customers’ expectations with each product. Purchasing stocks from Apple is highly recommended.
Facebook Inc.
The name Facebook is mainly associated with a popular social media platform which is under Facebook Inc. Facebook provides software services and serves as an online marketing tool. The stock symbol for the corporation in the market is FB. Facebook stock prices in the market show high amounts of volatility and an upward trend. The corporation’s previous close in valued at $226.29 but is expected to increase to $244.00. Facebook has established an image that is strong for its brand. The customer base for its services is large translating to high revenues. However, advertisement coupled with little diversification in the business impacts the customer experience negatively. The purchase of stocks from Facebook is not recommended due to the high volatility in the prices.
Conclusion
Making the right decisions when selecting stocks to purchase is crucial. Stocks purchased are an investment to a buyer. The selection of stocks to be purchased should be in such a way that they yield the maximum return. The maximum return is indicated by the P/E ratio. However, the return should not be the only factor that should be considered in deflecting the stock. Knowing the company’s profile is important. Observation of past values of the stocks should also be done to determine the trend of stock prices. The observation of the prices also indicates volatility. The high volatility indicated in stocks depends on both internal and external factors in the organization. The best stocks for purchase are those which show low levels of volatility.