Investment Companies Essay
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Investors need to consider a lot of factors before investing their money in any firm. Company stability and ability to generate profits is the main attraction for any investor. Bank of America and Apple Inc are some of the most stable companies in their respective fields. Besides these are some of the highest paying industries in the world today. Bank of America Bank of America is the largest brokerage house and consumer banking franchise in the United States (Lewis, 2010, p1) during the financial crisis, bank of America posted huge losses coupled by the untimely purchase of Merrill Lynch.
However in April 2010 bank of America reported a $3. 2 billion first quarter profit signifying an imminent complete turnaround for the company. Interestingly, most of the profits were generated from the trading at Merrill Lynch. The gamble to buy Merrill Lynch had paid off. With the worst of the financial crisis over, bank of America is poised to make bigger profits and reclaim its eminence that it lost to JP Chase and Goldman Sachs. Though it is unlikely to continue with the acquisitions that characterized most of its growth phase, the bank no doubt will be a big player in wealth management in the US.
Long term investment in bank of America therefore will be a wise decision by an investor who is looking to capitalize to a rising stock price and dividend per share revenue. Besides, the regulations that the administration will introduce will ensure profitability and stability of the banking sector. However, given that the financial markets have not fully recovered, coupled with the impending WallStreet reform by the administration, there is likelihood that resulting volatility may eat into the company’s profits and share price.
Besides, the company, like many other banks is still repaying government bailout money, a move that will affect its profits and effectively its investors. Apple Inc Dynamism describes the world of technology today. New information gadgets are introduced to the market every year. Apple is on of the companies that has emerged as a market leader challenging established giants like Microsoft and easily cutting a niche for its itself in the market. Apple prides itself with successes such as the i-Pod, the i-Tunes Store, MacBook sales, and excellent Mac OS X.
Innovation to meet the ever demanding market is the main driver of apple and with its cutting edge products like the i-phone, i-pod and recently the i-pad, investing in Apple inc will be a good decision because certainly these are not the last of their products. The company has one of the highest share prices in the New York Stock exchange which stood at $140 pr share as of 2008 (Tyson, 2008, p 11). Every time people buy Apple products, it increases the company sales and profits which in return drive up the stock price (Tyson, 2008, p 11).
With the continued good performance, an investor is guaranteed of good returns in the long run. While some computer and software companies saw their profits plunge during the recession, Apple’s strong position ensures continued movement of their products, a clear indicator that the company can whether big economic fluctuations and guarantees an investors returns for their money. Apple Inc. has concentrated on developing mobile gadgets but the same effort is needed in developing products like the Mac desktop.
Competition from other computer and software manufacturers is stiff and an information technology company that cannot sustain the innovation trends is likely to post less sales, profits and stock price. Competitors like Microsoft and phone manufacturers like Motorola are likely to come up with gadgets that will target the entertainment industry, enterprise and high performance computing, none of which apple is well prepared for (Martellaro, 2006, p1). Expanding their niche therefore to include more products will secure the future of the company and ensure long-term stability.