We found that, though the two companies are quite profitable, Blue Scope Steel Limited is more profitable as we recommend those currently holding its stock should hold or buy more. Our recommendation is for our company to invest in this particular company.
Globalization, the new information technology, and deregulation of financial markets and the quest for market dominance have eased the provision and search of finance. Today, millions of shares are traded every day on the world's stock markets. (Penman, 2003). Most often, investors see valuation as the first step toward intelligent investing. It has been argued (e.g. Penman 2003) that an investor can make informed decisions about where to invest once the value of shares are determine based upon the fundamentals. This is so because, without this value investors can either buy high or sell low Investors who trade on these stocks are often forced to ask themselves whether they are buying or selling at the right price. (Penman, 2003).
Faced with too much information, Investors at times get confused with no clear indication of what the true prices of stocks should be. (Penman, 2003). Under such circumstances, the investor either make decision based on his or her instinct, such investors according to Penman (2003) are intuitive investors while others who make their decision based on capital market efficiency are referred to as passive investors (Atrill & Elliot2005).
Penman, (2003) further argues that in making their decision, passive investors assumed that the market price is a fair price of the shares quoted. These investment mechanisms appear to be very simple, as they do not require much effort. (Penman, 2003: pp 3). How ever that is not the case as neither passive nor intuitive investor turn to be better off in the face of their decision. This is so because these sets of investors can either pay to high or sell too low (Damodaran, 2002).
1.1BlueScope Steel Limited
According to the Company 2008 report, BlueScope Steel Limited (BlueScope Steel) is an Australia-based company (Report 2008). The Company is made up of different subsidiaries and is principally engaged in the manufacture and distribution of flat steel products; manufacture and distribution of metallic coated and painted steel products; steel building products, and sometimes in the design and manufacture of pre-engineered steel buildings