Trader Joe Investments
FIN 430 Segment 3
Advisors:
Tanner Bailey
Alexis Sager
Margaret Smith
Anthony Diaz
Part 1: Introduction
Trader Joe’s investments is a relatively new investment advisory firm on a mission to
help clients learn the basics of investing. In addition, we are looking to help clients build healthy
risk-balanced portfolios. The COVID-19 pandemic has presented major challenges for each
company described in our report. Trader Joe’s expects almost all of the companies mentioned to
make close to a full recovery. We will be discussing both optimal and arbitrage portfolios in this
report. Effects of the pandemic will be highlighted 10-K reports during the year 2020. We do not
predict for any possible long-term changes caused by the COVID-19 pandemic to negatively
impact either of our portfolios.
During this segment we will be analyzing both an optimal and arbitrage portfolio. Both of
these portfolios vary drastically in creation techniques, therefore, will allow us to draw different
conclusions from each one. At the end of the report we will be making a recommendation on
which portfolio we believe has a more promising outlook.
Manufacturing
In this section, we are going to briefly introduce each of our companies selected for our
optimal portfolio and go over what each of them brings to the table. We are going to introduce
our companies based on what sector they fall under. We will start with our companies falling
under the manufacturing sector. Then we will describe companies falling under the industrial
technology, electronic technology, consumer cyclical, financial services, health care, and
consumer staples sectors.
The companies in Trader Joe’s investment portfolio that fall under the manufacturing
industry are Procter & Gamble Co, Clorox Co, Church & Dwight Co Inc., and Colgate Palmolive
Co. To begin, Procter & Gamble Co (PG) is in the manufacturing industry through the household
products sector. P&G can be found in many homes around the world. They produce goods
related to skin and personal care, feminine care, and fabric care. Some of their well-known
brands are Bounty, Dawn, and Tide. The next company in this industry is Clorox Co (CLX). This
company is in the manufacturing industry through the household products sector. The Clorox
Company produces disinfecting wipes for people globally. They also manufacture popular goods
such as Hidden Valley Ranch, Burt’s Bees personal care products, and Glad garbage bags.
Church & Dwight Co Inc. (CHD) also participates in the manufacturing industry through the
household goods sector. CHD produces fabric care, health, and well-being, as well as personal
care products. Founded in 1846, Church and Dwight Co Inc. is one of the leading manufacturers
of the goods they produce. Well-known brands CHD produces are Arm and Hammer fabric and
home care, Nair, and Orajel. Lastly, Colgate Palmolive Co (CL) is a manufacturing industry
through the household products sector. Started in the 19thCentury, CL began as a small soap and
candle shop in New York City. CL now produces Colgate toothpaste and oral care products.
Colgate Palmolive Co also produces Palmolive dish soap, Irish Spring soap, and Speed Stick
antiperspirant.
Industrial Technology
Trader Joe’s selected four companies from the industrial technology sector. The first
company in this sector is Apple ($AAPL). Apple inc. engages in the design, manufacturing, and
sale of smartphones, computers, tablets, and accessories. It operates globally, locations include
the Americas, Europe, Greater China, Japan, and the Asia Pacific. Its popular products include
the iPhone, iMac, iPad, AirPods, Apple Tv, and Apple Watch. The company was founded by
Steve Jobs in 1977 and is headquartered in Cupertino CA. The next company in the sector is
Amazon ($AMZN). Amazon inc. engages in the idea of online retail shopping services. It
operates through the following channels North America, International, and Amazon web
services. Their business is centered around offering retail sales of consumer products. Many
consumers utilize their website for purchases and orders. The company was founded by Jeff
Bezos in 1994 and is headquartered in Seattle, WA. The third company in this sector is Twitter
($TWTR). Twitter inc. is a global platform for public conversation and views in real-time. It
provides a platform that easily connects people to other people, new information, and new ideas.
The company’s services include live commentary, live connections, and live conversations. The
company is also frequently used by businesses as a marketing tool. Twitter was founded by Jack
Dorsey, Christopher Stone, Noah Glass, Jeremy LaTrasse, and Evan Williams in 2006. The
company headquarters are located in San Francisco, CA. Our fourth and final company in this
sector is Facebook ($FB). Facebook inc. operates as a social networking company worldwide.
The company offers an easy way for people worldwide to communicate. Users can post opinions,
photos, and videos directly on their homepage. The company’s products include Facebook,
Instagram, Messenger, and Oculus. The company was founded by Mark Zuckerburg, Dustin
Moskovitz, Chris Hughes, Andrew McCollum, and Eduardo Saverin in 2004. The company is
headquartered in Menlo Park, CA. We are also looking at the company Boeing (BA) which is in
the industrial sector through the aerospace & defense industry. Boeing is an American company
that manufactures and designs airplanes, rockets, and satellites. They are among the largest
aerospace manufacturers across the world and are the largest exporters in the United States.
Electronic Technology
Our firm also selected two stocks from the technological sector, Nvidia (NVDA) and
AMD (AMD) and they were both also in the semiconductor industry. They are American
companies that develop competing computer processors for gaming and professional markets.
Nvidia also created its own game console as well as a cloud gaming service. Nvidia has recently
started to move into making processors for smartphones and tablets and further developing their
artificial intelligence. AMD develops computer processors catered to the business and consumer
markets. They create motherboards, graphic processors, and microprocessors for servers and
personal computers.
Consumer Cyclical
One stock our firm chose to analyze was in the consumer cyclical sector through the
internet retail industry. This company is Alibaba Group Holding Limited (BABA), otherwise
known as Alibaba Group. They are a Chinese multinational technology company that specializes
in e-commerce, retail, and technology. They are largely considered to be the Chinese version of
the company Amazon as their website sells a large variety of different products that you can not
find elsewhere. Along with being an online retailer Alibaba is also one of the biggest venture
capital firms and investment corporations in the world.
Financial Services
Looking into the financial services sector, our firm chose two stocks that were involved
in different industries. Aflac (AFL) which is affiliated with life and health insurance as Bank of
America Corporation (BAC) is associated with diversified banks. Aflac Inc. is an American
insurance company, recognized for being a massive contributor of supplemental insurance in the
United States. Additionally, providing extra help to employees and their families with out-of-
pocket expenses that might not be covered by their medical insurance in the event of a serious
accident or illness. Founded by brothers John, Paul, and William Amos in 1995 with
headquarters located in Columbus, Georgia. The Bank of America Corporation is a leading
worldwide company in investment banking and financial service holdings. Assisting Clients with
a broad range of financial products and services in order to achieve comprehensive solutions that
help them succeed in today’s market and prepare for the future. Initially helping valued
individuals make their lives better by navigating every stage of their financial lives. Founded by
Amadeo Giannini in 1998 with headquarters located in Charlotte, North Carolina.
Health Care
Our firm also chose a stock from the health care sector. Cardinal Health Incorporated
(CAH) operates in the health care distributors industry. This health care company is an American
multinational integrated healthcare service and products company. They help provide
pharmaceuticals and clinically proven medical products to other hospitals, healthcare systems,
pharmacies, hospitals, ambulatory surgery centers, clinical laboratories, and physician offices.
Servicing pharmaceutical manufacturers and healthcare providers to supply products like
surgical and laboratory products and more. Continuing a tradition of focusing on patient care,
