The most common interview question for investment research roles is the classic "Pitch me a stock." This question tests your ability to articulate and defend an investment decision clearly and persuasively. To deliver a strong pitch—whether spoken or written—follow a structured approach. A well-organized response not only ensures clarity but also helps you stay on track throughout your presentation. Here are some key tips to pitch a stock effectively.

This is the structure that I recommend:

• • One-liner on the company 

  • One-liner on the company’s business model 

  • One-liner on the consensus view

  • Reason 1 for investing

  • Reason 2 for investing 

  • Reason 3 for investing 

  • One-liner to wrap it up

Let’s go through each of these in detail with an example for the company Chipotle:

• • One-liner on the company. Explain in very simple terms what the company does and the industry in which it operates. A one-liner is often sufficient but if you are pitching a less well known company that operates in an opague industry, you may need to add more detail to provide additional context. Again, the key here is to explain things as simply as possible. Example: Chipotle is a Mexican-inspired fast-casual restaurant chain with 3,000+ restaurant locations across the US/Canada, Europe, and Middle East. 

  • One-liner on the company’s business model. The ultimate objective of the pitch is to articulate why you think the stock is undervalued. As such, it’s important to clarify the business model and how the company is well positioned to grow future earnings/cash flow.  Example: Chipotle generates the majority of their revenue from food and drink sales in their owned and operated restaurants. They also earn ancillary revenue from catering services and branded merchandise. Note: If possible, quantify the % coming from each revenue source. You can often find this information in their 10-K or annual report. 

  • One-liner on the consensus view. Provide context on what is already baked in the stock. Keep in mind that alpha can only be generated when the company outperforms the current expectations embedded in the stock price. Stating the consensus view also sets you up for your key reasons later. Example: Market expectations are that intense competition and lack of innovative menu items will slow growth to 2% over the foreseeable future.

  • Reason 1 for investing. Provide your first reason why the market is under-appreciating the stock. Example: The consensus view is that Chipotle’s revenue growth will be 2% over the next two years. However, I believe Chipotle can achieve more than double the current expectations due to increased customer traffic, higher average transaction values, and successful expansion into new markets. Note: Provide additional data to back up your views. For example, you can discuss their history of introducing new menu items or recent expansion into new markets.

  • Reason 2 for investing. Provide your second reason. Example: Chipotle is benefitting from positive structural industry trends and consumer preferences that the market is not fully appreciating…[List these trends here]

  • Reason 3 for investing. The last reason should be related to valuation. Even a great company can be an unattractive investment if the purchase price is too high. The first step is to decide on the appropriate valuation methodology for the company. In most cases, you’ll use valuation multiples as the primary valuation method. Each industry has its own standard valuation multiple that investors utilize. For financial services firms, that is P/E or P/TBV; for high growth tech companies, it’s P/S; for mid-growth companies, that can be EV/EBITDA. Compare the company’s valuation ratio to their peers and against historical levels. Example: Chipotle represents an especially buying opportunity as the stock is trading at an attractive valuation, with a EV/EBITDA multiple of 38x versus peers at 40x and 50x 5-year historical average. Assuming Chipotle can increase their EBITDA by $2B based on the reasons I outlined above, even if multiples contract to 20x, that would represent 75% upside to the current stock price. 

  • One-liner to wrap it up. Summarize your three points in a succinct manner. Example: I believe Chipotle is an attractive investment opportunity due to its under-appreciated revenue growth potential, inflecting structural industry trends, and attractive valuation.