Chris is one of the youngest employees in his company who is about to retire. For instance, he has worked for about 18 years in the parent company, and as of now, he is at age 40. There are many choices which people who are close to their retirement age must make to ensure that their future is excellent. Chris is a risk love because he has taken so much risk and is ready for any level of uncertainty that may come up. Besides, he has figured about investing in the existing stocks in the USA market. There are many stocks as such; the investor must always come up with the best investment strategy. Despite that, the world has been changing through technology and many other factors still investing in stocks is the only best option. As a financial manager, I have to consider all the clients’ dreams and have a variety of options in the stock market. Based on the in-depth research that was conducted, AbbVie Inc has the firm which has an outstanding performance in the market. In essence, this company has been performing well in the American Stock Exchange and seems the best option for the client.
The rationale for choosing the company in which to invest
AbbVie is one of the best pharmaceutical companies in the USA. The company has been growing, and its performance on the American Stock Exchange is unquestionable. There are so many companies in the stock exchange market; however, I choose this company because of its constant growth despite not being one of the biggest companies. The company has good management, and its share price is expected to grow continuously because of the investment that the company has made. The world is changing because of the application of options like technology and many other management systems that have created more opportunities for the company’s growth. There are many companies like Amazon, Apple Inc., or Microsoft that Chris could have invested in, but this was the best option because the share price will constantly be growing. A growing company is always better than a fully established company because of the options available to the investor. Therefore, it is essential to factor in the elements that will help the investor come up with the best deals that will grow their wealth in the future. After retirement, every employee expects not to gamble with the nature of investments which they take.
Also, another major factor that contributed to the choosing of AbbVie was the high stakes of investment. Th company has a future expected trend of growth because of the policies of expansion. More significantly, now that the company is targeting the UK region, there is a higher probability that its revenue and shares will increase. As such, many investors will have their investment bid on the company. As a result, it is expected that its share price will grow at a significant margin in the future. The company has also been licensed to operate outside the USA market. As a result, it will be easy for the company to extend its market segments to other economies. However, the UK market is one of the biggest and most productive markets in medicals and pharmaceutical technology. Hence, if the company has aimed at the European region, then there is higher expected growth in their policies and an investment option. Therefore, Chris is expected to rip meaningful revenues and profits from the company in the coming years.
The ratio analysis of the AbbVie firm was mainly conducted based on the investment ratios. For instance, the company is one of the top ten companies in American pharmacy stocks. As such, the primary goal of investing in the shares is to look at the investment, return of investment, and the impact on the portfolio in the future. In addition, AbbVie has a net worth of 33.1 billion dollars which is very high (Investing.com, 2021). As a result, when valuing their stock, it is possible to know the firm’s potential in the next few years and for the long term.
Return of equity (ROE)
ROE is one of the best ways of assessing the company’s performance both in the current and future based on its past index. It is, therefore, a measure of the stockholders’ equity by considering the value of depth of the company (Amir & Ghitti, 2020). The value is calculated by dividing the net income by shareholders’ equity. It is thus a measure of value that is assessed to calculate the net company’s profitability in the stock market.
AbbVie has an ROE of 51.79%, which is a good figure above the acceptable of 14%. The value is thus proven that the company has a higher likelihood of performing even in the future. The world is growing, and at this rate, investors must always consider this option as the best in determining the most effective ways of assessing the company’s performance in the market. There are many meaningful ways of assessing the investment value of a company; however, this is one of the best. Therefore, AbbVie is one of the best investment options for an investor.
Return on Assets
Return of Assets is a measure of a company’s profitability based on the value of its assets in the market. For instance, how a company can change their assets to money or revenue quickly. It is a business-level scale on how the assets can generate more income for the company. ROA is one of the best ways of assessing a company’s growth in terms of assets with other competitor companies in the market (Pivnyk, 2020). Besides, the ratio creates the best assessment because it does not consider the company’s depth as a measure.
AbbVie has a 7.73% five-year average and a TTM of 5. 05%, which is a good value compared to the value of the normal growth of a company. A 5% is considered an average ratio, but the company is performing well in the market (Investing.com, 2021). The fact that the company is expected to grow well explains why the firm has potential in the investment value. Thus, AbbVie is the best investment option in the American Stock exchange market.
Return on investment (ROI)
Return on investment plays a vital role in developing the essential requirements of the company in the future. More significantly, creating the relationship between the firm and the other existing portfolios in the market. The primary aim is to test the efficiency of the investments that have been conducted by the company (Fernando, 2021). As such, the primary goal is the amount that a specific investment will offer at the end. There are many other goals of the firm, excluding the value earned from significant portfolios. The result is expressed as a percentage ratio in the whole procedure of calculating the ROI. Thus, ROI evaluates that value and creates a good relationship within the company.
ROI of 7% or more is considered a good investment or performance of option for the company. AbbVie has had ROI of 9.72% over the past five years, which has created a good return over the many investments AbbVie has engaged at for a long time (Investing.com, 2021). Though not all the investments have been doing well, the few assessed have positive feedback (Fernando, 2021). As such. AbbVie is the best option for investment of Chris.
Stock price analysis
Stock price analysis plays a significant role in testing the performance of a company. More significantly, the trading elements of a particular stock in the market. The primary goal is to determine the future value of the stocks on the American Stock Exchange. As a result, the final goal is to develop a plan to help the investor choose the appropriate stocks in the market. As such, when creating good selling and buying decisions, investors always consider creating a better marketplace. These are two methods of stock analysis that is; fundamental and technical analysis.
The economic and financial factors which have a close association with the business are well considered in this type of assessment. For instance, AbbVie is an international firm that has mainly targeted the economy of the USA and the world at large. As a result, it becomes easy for the investor to make viable decisions concerning the topic (Segal, 2021). The state of the economy and many other microeconomic factors play an essential role in this type of performance analysis. Therefore, the primary aim of this investment process is to come up with a specific decision that will align with the client’s choice.
Many factors are expected to impact the client’s decision to take the option of AbbVie. For instance, the fact that AbbVie will be targeting investing in the UK and other economic grounds in the world affirms a better performance in the future. For instance, AbbVie, with a revenue of 14.3 billion dollars, means that the company is a good option for investment (Investing.com, 2021). Therefore, as a finance manager, the option of AbbVie is the best investment option for the client.
Technical analysis is a trading method that, mainly through data analytics, assesses the company’s potential. The information and data must be collected and analyzed for the investor to decide to buy the stock (Segal, 2021). AbbVie has been performing well over the past, and currently, their stock price is increasing. Therefore, combining the past five years’ data will help the client choose the best stock option.
Many recommendations can be made from the stocks for the client. The main actions required were mainly based on the procedure of choosing the investment portfolios as well as creating the best decisions. The primary goal of financial managers is to link the customers with the best investment options to help safeguard their capital in the market. Therefore, the recommended actions were based on the options the client would take.
The price of the stock is the primary factor considered when investing in the American Stock Exchange market. For instance, the customer must always ensure that the stock price rhymes with their portfolio goals in the future. As such, the customer must continuously invest in securities that will pay well in the future. Technical analysis will help the client in choosing the options that have a better expansion rate. Despite that AbbVie is the best-chosen option for the market, there is a need to consider the future investment goals based on their target objectives. A significant number of firms have lost investors because of their stochastic challenges. Therefore, the client must analyze the share prices from the past to the current and the times head.
The competition of AbbVie with other pharmaceutical companies is essential in the current market. More significantly, Chris will have to factor such elements into the financial market. The primary aim is to come up with a variety of options. AbbVie has invested in research and innovation, which creates a better vision of the company. The firm has invested 65.9 billion dollars in the research field. The investor will have to consider the impact of research and how it will likely affect future revenue.
The fact AbbVie is the best option for Chris as an investor cannot be ignored. More notably, through the stock price and the investment ratios, the firm has the best revenues deals for the future of the client’s venture. Besides, based on the past data performance of the company, there is a higher expectation that the company will increase in their share price in the future periods. Therefore, Chris will need to consider AbbVie as one of the most available portfolio options in the future.
Amir, E., & Ghitti, M. (2020). Financial analysis of business combinations (Ratios). Financial Analysis of Mergers and Acquisitions, 141-164.
Fernando, J. (2021). Return on investment (ROI) definition. Investopedia.
Investing.com. (2021). ABBV earnings date & report (AbbVie).
Pivnyk, K. (2020). Creating a group of financial ratios to evaluate financial policy of companies. Finance and Credit, 26(5), 1039-1053.
Segal, T. (2021). Fundamental analysis. Investopedia.