Portfolio Management Project Risk Tolerance Thesis

Joy Global's success is tied to the cyclical mining industry. The firm's current P/E is 12.38, indicating a mature operating environment. As commodities markets begin to improve, growth in the mining business will pick up. Increased growth will improve Joy's multiple, perhaps up to 15 times. This will give the company a stock price of $64.95.

CTrip has a P/E of 77.21, very high but supported by the firm's high growth rate. Interest in China tourism will continue to grow at a faster rate than overall economic growth. As a result, the multiple is justified. Earnings will continue to improve at their historic rate, given the company an expected future share value of $143.61.

Gerdau's success is tied to industrial development in Brazil. The P/E is currently 64.40, which indicates a high level of growth. The Brazilian has performed well in recent years, but its growth is volatile. Gerdau's growth has been strong some years, minor in others. The current high P/E reflects strong recent growth, but the multiple should come down in the coming months, to around 58 times earnings. This will give the stock a value of $14.50.

Gol Lineas has no trailing P/E, since it loses $1.74 per share. The forward P/E is 12.07 times. However, rising fuel costs and struggles in the Brazilian economy due to the economic downturn will see the earnings fall short. The company will again lose money, so the actual P/E will be negative. The stock will fall as a result of this underperformance, to around $9.

Green Mountain Coffee Roasters has a high multiple of 45.21 on account of its rapid growth in the past couple of years. This growth is unlikely to be sustained as the company matures and enters into more intense competition with existing coffee outlets. The multiple will need to come down to around 30 in order to match the company's realistic future growth prospects. This will give the stock a price of $41.70.

Rio Tinto lost money last year. The forward P/E is 12.97 times. Earnings are likely to rebound next year as commodity prices improve with the overall global economy. Thus, the current price for Rio Tinto is likely to hold.

Vale is in a similar situation as Rio Tinto, except that it made money last year. The P/E for Vale S.A. is 25.64. Earnings should improve, resulting in an improvement in stock price. A 10% boost in earnings would give Vale S.A. A stock price of $31.58.

Wendy's is subject to shifts in U.S. consumer spending. This is expected to grow slowly over the next year. As a result, the company may return to profitability. With no profits, it has no P/E. The forward P/E is also non-existent, as the firm is not expected to make money in 2010. The stock price, then, is liable to hold steady pending a major shift in consumer spending.

Portfolio Expected Performance:

AAPL

20623

0.238841

1.5

9.87

2.357365

BRCD

8.62

0.049915

1.94

12.7652

0.637181…