How to Pitch a Stock – and Find An 'Angle' at the Last Minute [Tutorial]

In this tutorial, you’ll learn the structure of a stock pitch and how to find ideas and screen companies at the last minute – and how to complete the research and valuation process and find an “angle” for the company you pick.

Table of Contents:

1:30: Stock Pitch Structure

4:45: Idea Generation

14:34: Research and Valuation Process

18:05: Recap and Summary

Get the text version of this tutorial and sample templates below:

For the files used in this tutorial, please see:

Stock Pitch Structure

Part 1 – Recommendation

Part 2 – Company Background

Part 3 – Investment Thesis

Part 4 – Catalysts

Part 5 – Valuation

Part 6 – Risk Factors and Mitigants

Idea Generation

Step 1: Figure out what strategy the firm you’re interviewing with uses, and which industries it likes and does not like.

Step 2: Pick an industry matching the firm’s strategy/industry or one that you know about.

On Finviz, we’ll screen for companies using “Industrial Goods” for the sector and “Industrial Equipment” for the industry, which gives us 12 companies.

Step 3: To screen this set, look for mid-sized companies in the industry – ideally ones in the $1 – 10 billion market cap range for U.S.-based picks (or, by revenue, hundreds of millions to low billions).

And look for companies where there’s been a clear divergence from the overall stock-price trends in the market over the past few months or year.

Barnes Group [B] and Standex Group [SXI] are the best candidates here, and we’ll add TriMas [TRS] as well.

Steps 4 and 5: Narrow this set further based on key drivers, pure-play businesses, and clean/simple financial statements. You want companies with 3-4 main drivers and perhaps 2-3 main business lines.

The financial statements aren’t that different, but Standex appears to have more segments than the others, which will make the research and valuation process take more time.

So, we’d narrow this to Barnes Group [B] and TriMas [TRS].

Step 6: Favor companies with clear catalysts in the next 6-12 months, such as an acquisition or divestiture, major product launch, expansion, strategic change, etc.

TriMas appear to have one in the form of an announced acquisition, but it’s quite small – only $12 million annual revenue vs. net sales of almost $900 million for TriMas!

As a result, and given the lack of other strong catalysts, Barnes Group is probably a better candidate.

The company does have some recent product/business launches and growth areas like “Automation,” and its business has shifted considerably in the past few years.

We could also argue the company has been unfairly penalized for its exposure to Aerospace (~34%) and, therefore, Boeing… despite not focusing that much on the grounded 737 MAX.

Research/Valuation Process

You need to complete four main steps here:

1. Research the Company and Industry: Find annual/interim reports, the latest investor presentation, and recent press releases.

2. Build a Simple DCF-Based Valuation: Project revenue and expenses in some detail, such as Units Sold * Average Selling Price, or Market Share * Market Size… perhaps 100-300 rows in Excel.

3. Public Comps: Find and use them, but use Finviz or Google Finance to save time (see our Comparable Company Analysis tutorial).

4. Do Real-Life Research: Speak with people in real life for a few hours – find suppliers, customers, etc. on LinkedIn and email them. Offer to share your views on the company or market as an investor in exchange for their thoughts on a few operational questions you have.

For the real-life research, General Electric, Rolls-Royce, and United Tech seem to be important customers… so we’d start there and look for possible contacts on LinkedIn.

Our angle here would probably be something to do with the market over-penalizing the Barnes Group due to its Boeing exposure; under-estimating its Automation segment; and possibly underestimating its margin expansion potential.

Or, we might take the opposite view and say that it should fall even more than it already has… it just depends on the results of the process!

Possible catalysts might include backlog updates, announcements related to Boeing, earnings announcements with “Automation” results, acquisitions, and more.

We didn’t actually complete a valuation/DCF for this example, but if we had more than 30 minutes, we might have done that as well.

[antonypilibosian]

great job. you covered all the steps needed for a stock pitch. keep going!
what methods are mostly used for valuation? DCF and what else? do you have videos made for valuation? or would you recommend me a video that explains detailed how the DCF or other methods are done?

[prathameshpandit]

Thanks for this great tutorial :)

Is there a way to find out if a catalyst/news is already priced in and to what extent?

[REALCTM]

Are most of the investor presentation slides found on a company's investor relations page? Are there other places that can be used to find prior years presentation?

[giovannipoliti]

where can I find some stock pitch reports as well as equity research reports?

[spigbungus]

Do BB firms usually have their own standardized way of pitching a stock?

[ebitda]

This was exactly what I was looking for, Thank you!
One more thing, do you have any examples on how to build excel templates for DCF, FCFF, and other valuation analyses?

[VerticLol]

Where could I find an excel like you presented on DCF?