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Friday February 21 st , 2014

Friday February 21 st , 2014. Lafayette College Investment Club. Meeting Agenda. 1) Market Update 2) AT&T Pitch (BUY T, SELL VZ) 3) Financial Statement Overview 4) Announcements. Market Update. By: Chris Ulyett and Ryan McCormick. Buy American. Many analysts predict “Made in the U.S.A.”

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Friday February 21 st , 2014

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  1. Friday February 21st, 2014 Lafayette College Investment Club

  2. Meeting Agenda • 1) Market Update • 2) AT&T Pitch (BUY T, SELL VZ) • 3) Financial Statement Overview • 4) Announcements

  3. Market Update By: Chris Ulyett and Ryan McCormick

  4. Buy American • Many analysts predict “Made in the U.S.A.” • Three Reasons • China’s Economy • U.S energy independence • Skills and innovation

  5. Labor Market • U.S. workers are slowly getting bolder and shedding caution • Quitting rate reported at 1.8% November 2013 • Average quitting rate is 2.1% • Most Recent low in quitting rate 1.2% in September 2009

  6. Suspension of Debt Ceiling • Extends the government's borrowing authority until March 2015 • The first time since 2009 Congress has passed a "clean" debt limit.

  7. Farm Bill • Added insurance for agriculture sector • $7 Billion in aid for ranchers and farmers nation wide • $8 billion cut to food stamps

  8. Changes At Coca Cola • CFO Gary Fayard will retire • To be replaced by veteran Kathy Waller • Waller announced $1bn cut in costs this year in response to down quarter

  9. Market • Ends at week high in DOW and S&P 500 • DOW gained 0.6% • S&P 500 gained 0.6% • Eurofirst 300 gained 0.01% • Shanghai dropped 0.18% • Gold down 0.3% to $1,317

  10. Buy AT&TDump Verizon NYSE: T, VZ Industry: Telecom Services

  11. Company Descriptions • Multinational broadband & telecommunications • Operates in wireless, wireline, broadband television subscription • Share an oligopoly with each other

  12. Performance in Sector • Combined AT&T and Verizon dominate the mobile wireless and broadband market. • FCC reports that the companies enjoy 60% of revenue

  13. So, why sell Verizon (VZ)? • Overvalued. P/E (ttm) of 12.03 (but isn’t this good? Not in this case!) • Investing too much in wireless market. Single focused. • Only owns 55% of its most lucrative division VZ Wireless • Get out now, yield benefit. • VZ (FiOS) is underperforming to keep up with AT&T (U-Verse) wireline

  14. Overview: Why Invest in AT&T? • AT&T invested in future growth. • Long-term dividends! “Our dividend is clearly a sacred matter for us.” CFO John Stephens • Dominant in wireline business (broadband and video offerings). • Forward thinking management team: overseas investments.

  15. The Numbers: Why Invest in AT&T? • 29 consecutive years of increased dividends. Now at 5.6% • CEO Randall Stephenson has a vision for growth in European market • Currently stock is discounted because VZ is perceived to have stronghold. • Expected 6.5% earnings growth. • Trading at lower P/E (ttm) ratio (9.79) and higher yield than Verizon

  16. Financial Statements Othman Guennoun Irvin Cedillo February 14th, 2014

  17. The 4 Financial Statements • Income Statement • Statement of Retained Earnings • Balance Sheet • Statement of Cash Flow • They all flow into one another

  18. Why are they used? • Important reasons: • Show performance • A mean for investors to measure a company • Helps the managing team make important decisions

  19. The Income Statement • Basic Formula: Revenues – Expenses = Net Income or Net Loss

  20. The Statement of Retained Earnings • Basic Formula: Beginning Retained Earnings + /– Net Income – Dividends Declared = End Retained Earnings • Net Income from the Income Statement

  21. The Balance Sheet • Other name: Statement of Financial Position • Snapshot of a company on a specific day • Basic Formula: Assets = Liabilities + Stockholder’s Equity

  22. Assets: Economic resources to benefit the future of the company Current: Cash, Supplies, Inventory Non Current: Land, Equipment, and Buildings • Liabilities: The company’s debt Current: needs to be paid back within a year Long Term: over a year • Equity: Retained Earnings, Common Stock, APIC

  23. Statement of Cash Flow • Operating Activities • Investing Activities • Financial Activities • Shows what the company is doing throughout years. Expand? • Net Income in all 4 statements

  24. Ratios • Current Ratio • Use ratios to compare companies (competitors)

  25. Important Announcements • 1) Potential Speakers coming …. • Bennett Goodman • Charles Chesebrough 2) Fleece Trivia Contest • Currently designing a trader like fleece to be given to select students who answer correct questions 3) Board Meetings Will Be held in 12:15 Simon Lobby • If you would like to be added to chain email please see me after meeting (board or member) 4) For next week look at BAC we are going to pitch a sell

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