Share Performance Investgation

Introduction

This project requires the candidates to invest £100,000 equally into four different companies' shares. As a share portfolio, all shares should be chosen in the FTSE 100. We also should observe and note the information of shares such like price and trend of the shares during the 17 December 2012 to 31 March 2013. All the information will be analysed in the evaluation part of this report.

1.1 Companies selected for project

British Petroleum plc: one of the largest oil and gas producers in the world.

Tesco plc: the biggest food retailer in the UK.

Royal Bank of Scotland Group plc: provider of the bank and financial service.

Xstrata plc: a general mining company in UK.

Company Code Company Name Market Price (P) Number of Shares Purchased Cost of Share

BP British Petroleum plc 427 5,850 £24,979.5

TECO Tesco plc 341.7 7,350 £25,063.5

RBS Royal Bank of Scotland Group plc 301.7 8,300 £24,983

XTA Xstrata plc 1,047.5 2,350 £24,604.5

Total Cost of shares £99,630

Company Code Company Name Sector EPS (2011/12) P/E Ratio (2011/12)

BP British Petroleum plc Oil＆Gas Producers 85.63p 5.40

TECO Tesco plc Food＆Drug Retailers 37.52p 8.50

RBS Royal Bank of Scotland Group plc Banks 2.00p 100.90

XTA Xstrata plc Mining 124.03p 7.80

The total cost of shares is £99,630.

1.2 Approach to the project

This project is aim to create an assumed situation that as an individual I invest £100,000 into four different company shares. To complete this report, I should collect the information in all directions and do the investigations and analysis. The information should be reliable and in a research period. So it is considered as exploratory case studies.

To obtain the information, the resource could be identified as primary data and secondary data. Primary data is also known as raw data, which is a term for data collected from a source. In this project, the primary data could be reflected in some particular statements and contents. For example, I will visit and phone the local branches of select companies to have a face-to-face interview with their office staff which can help to acquire comparative first-hand and professional information.

Compared with the primary data, secondary data is most common channel to collect comprehensive and historical information, mainly come from internet and document literature. For example, the library provides the varied books and periodical to give me the fundamental knowledge and skill support. And the interest could provide the newest and fastest information about the selected companies.

Meanwhile, I would integration and make the data graphic to help me analyse and compare the information in hands to make the conclusion.

1.3 Justification for choices

There are many factors could affect the price of the shares. To spread the investment risk, four purchased shares come from four different sectors which are oil and gas producers, the food and drug retailers, the banks and the mining. Firstly, the performance of the company as the one of the most important elements should be considered. The final purpose of investment is to obtain the profit and interest. Hence the performance could be the particularly significant factor. The companies chosen above all have a good historical performance, especially the Xstrata plc, the Xstrata plc had a £21,328 million turnover in 2011/12 and the profit before tax reached £5,130 million, the better performance would lead the higher profit for the investors. So Xstrata plc had higher Earnings per Share which are 124.03p. And the most important is that the EPS Growth is 11% for Xstrata plc. The Tesco plc also had a good performance in the past few years. In 2011 the pre-tax profit of Tesco plc increased from £3,641 million to £3,835 million, and the EPS growth is 3% in 2011, which is continuous six years growth.

Secondly, the reputation, influence and scale also should be considered because a better reputation and a good influence could attract more investors. So the good reputation means the company has an ability of develop enduringly. The scale not only means the scale of the production, but the scale of the customers. The more customers covered by your company's products, the more potential profitability you have. All companies chosen above are the companies of Fortune Global 500, and all of their shares in the FTSE 100. BP plc is the second oil and gas producer in the world, and the Tesco plc is the biggest food retailer in the UK. The reputations and the scale of those companies indicate the abundant strength and could be the reason why I choose them.

Thirdly, the excellent business management and business strategy also make the company more competitive. So the specific and effective company strategy is considered as an important element. For example, the Tesco plc has a 'seven part strategy' such as to grow the UK core, to be an outstanding international retailer in shores and online, to grow retail services in all our markets and so on, which aims to broaden the scope of business to enable it to deliver sustainable long-term growth. And I believe this specific business strategy will help the company to enlarge the market and increase the profit thus indirect increase the benefit of this company's share.

Finally, some other factor such as the government policy about the different sector also affects the selection of the shares. The trend of share price would affected by the economical situation and the government policy. For example, in 13 July 2012, the Bank of England announced a new plan aim to encourage bank lending. Therefore, government allows the bank do the four years cheap financing at 0.25% interest rate. It is a good sign for the banks sector, also could lead the rise of bank's share price.

1.4 Plan for carrying out project

This is totally includes the three parts which are Planning, Development and Evaluation. There are different contains in the three parts. The planning stage is first part, which I should do many prepare