An investment memo is how analysts communicate a recommendation. Your audience is a portfolio manager or investment committee with limited time. Your job: make a clear argument, support it with specific data and charts, and acknowledge what could go wrong.
This resource covers three things: how to structure a memo, how to use numbers effectively, and how to build professional charts in Excel. The charts section is detailed because this is the first time you're creating data visualizations for a professional audience.
Part 1: The Memo
The Structure
Every investment memo in this course follows the same format:
| Section | What It Does | Length |
|---|---|---|
| Header (TO / FROM / DATE / RE) | Identifies the memo. The RE line names the company and your recommendation. | 4 lines |
| Opening Paragraph | States BUY, HOLD, or SELL and the 1-2 strongest reasons why. | 3-5 sentences |
| Investment Thesis (numbered sub-sections) | Each section makes ONE argument supported by specific data points. | 4-6 sections |
| Key Risks | What could make your recommendation wrong. Specific, not generic. | 3-5 bullets |
| Conclusion | Restates recommendation with the strongest evidence. Bold the BUY/HOLD/SELL. | 3-5 sentences |
The 10-Second Test
A reader should know your recommendation within 10 seconds of opening the memo. The RE line should name the company and the recommendation. The opening paragraph should state it again. If someone has to read past page one to find out whether you're saying BUY, HOLD, or SELL, the memo has failed.
Using Numbers
Specific numbers are what separate analysis from opinion. Every claim in your Investment Thesis should cite data from the workbook.
The first version tells the reader exactly what happened. The second could describe any company. Rules:
- Cite the figure and the year. "$1,036M in 2023" can be verified. "Revenue grew" cannot.
- Use comparisons. A number alone means nothing. "Operating margin of 7.2%" is a fact. "Operating margin of 7.2%, down from 9.7% in 2022" is an argument.
- Don't overload. Each thesis point should use 2-4 numbers. More than that and the reader loses the argument.
Acknowledging Risks
The Key Risks section is where many memos go wrong: either ignoring risks (looks naive) or listing so many that the reader wonders why you're recommending the investment at all.
- Name risks specifically. "Labor costs rose to 34% of revenue in 2023" is a real risk. "The company faces various challenges" is filler.
- Explain why it doesn't change your view. "While labor costs have risen, route expansion and revenue growth have more than offset the margin compression."
- 3-5 risks. Fewer looks careless. More dilutes the important ones.
Part 2: Building Charts in Excel
Your memo requires two charts that directly support your argument. This section walks you through choosing the right chart type, building it in Excel, and making it look professional.
Which Chart Type Should I Use?
The chart type depends on what you're trying to show. Here are the four types you'll use most often:
| Chart Type | Best For | Example | When NOT to Use |
|---|---|---|---|
| Line chart | Showing how one or two metrics change over time (trends) | Revenue from 2019 to 2023 | Comparing unrelated categories (use bar instead) |
| Clustered bar chart | Comparing two metrics side by side for each year | Revenue vs. Operating Expenses by year | More than 3 data series (gets cluttered) |
| Single bar chart | Comparing values across categories, or showing growth rates | Year-over-year revenue growth by year | Showing trends over many time periods (use line) |
| Combo chart (bar + line) |
Showing a metric (bars) alongside a rate or ratio (line) | Revenue (bars) with operating margin % (line, secondary axis) | When both metrics use the same units |
Choosing a Chart for Your Memo
Start from your argument, not from the data. Ask: "What am I trying to prove?" Then pick the chart that makes that point visually obvious.
- "Revenue recovered from COVID" → Line chart showing the dip and rebound
- "Margins are declining" → Bar chart of operating margin by year, so the downward pattern is clear
- "Revenue is growing but margins are shrinking" → Combo chart with revenue bars and margin line
- "Labor costs are eating into profit" → Clustered bar comparing labor costs vs. operating income by year
Step-by-Step: Creating a Chart in Excel
These instructions work in Excel for Mac, Excel for Windows, and Google Sheets (with minor differences noted). For additional help, see Microsoft's official chart creation guide (opens in new tab).
Charts need their source data in a simple table. If you're making a revenue line chart, you need two rows or columns: one for years, one for values. Example:
| 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|
| Revenue ($M) | 895 | 394 | 677 | 959 | 1,036 |
You can type this into a blank area of the workbook, or select it directly from the financial statements tab. The key is that the year labels and the data values are in adjacent cells.
Click and drag to highlight all the cells in your data table, including the labels (years and metric names). The labels tell Excel what to put on the axes and in the legend.
Common mistake: selecting only the numbers without the labels. This produces a chart with "Series 1" instead of "Revenue."
Excel (Mac/Windows): Go to the Insert tab in the ribbon. Click the chart type you want (Line, Column, Bar, etc.). Excel will show preview options. Click the one that matches what you're looking for.
Google Sheets: Go to Insert → Chart. Sheets will auto-suggest a chart type. You can change it in the Chart Editor panel on the right.
Click the chart title (or double-click "Chart Title" placeholder) and type a title that tells the reader what the chart shows. Be specific.
Excel: Click the chart. Click the green + button (Chart Elements) that appears at the top-right corner of the chart. Check Axis Titles. Click each axis title and type the label.
Google Sheets: Double-click the chart → Chart Editor → Customize tab → Chart & axis titles.
The Y-axis (vertical) should state the unit: "$ Millions" or "Operating Margin %". The X-axis (horizontal) usually shows "Year" or is self-evident from the labels.
- Remove unnecessary gridlines: Click the + button → uncheck Gridlines (or keep only horizontal gridlines for readability)
- Legend: Keep it only if you have 2+ data series. For a single line or bar series, delete the legend (the title already tells the reader what it is)
- Font size: If the axis labels or title are tiny, click them and increase the font size. The chart will be embedded in a memo, so text should be readable at normal viewing size.
- Colors: Default Excel colors are fine. Avoid red/green combinations (colorblind readers can't distinguish them). Use blue, orange, and gray as safe defaults.
For Word: Click the chart in Excel → Copy (Ctrl+C / Cmd+C) → Paste into your Word document (Ctrl+V / Cmd+V). It will paste as an image.
For Google Docs: Right-click the chart → "Copy chart" → Paste into your Doc. Alternatively, use Insert → Image → paste a screenshot.
Place the chart near the thesis point it supports. Reference it in your text: "As shown in Figure 1, revenue recovered to $1,036M by 2023."
Troubleshooting Common Chart Problems
| Problem | What You See | How to Fix It |
|---|---|---|
| Data is in the wrong orientation | Years appear as legend entries instead of on the X-axis, or each year is a separate line | Excel: Right-click the chart → "Select Data" → click "Switch Row/Column." Sheets: Chart Editor → Setup tab → toggle "Switch rows/columns" |
| "Series 1" instead of a real label | The legend or axis says "Series 1" instead of "Revenue" | You didn't include the labels when selecting data. Re-select including the header row/column, or right-click the series → "Select Data" → Edit the series name |
| Negative values mess up the chart | A bar for -$51M operating income makes the whole chart hard to read | This is actually correct and makes your point (e.g., showing a loss year). If it looks cluttered, consider using a line chart instead of bars for metrics that go negative |
| Y-axis starts at a weird number | Axis starts at 300 instead of 0, making small changes look dramatic | Right-click the Y-axis → "Format Axis" → set Minimum to 0. (Exception: percentage charts where the range is narrow, like 5%-15%, can use a non-zero starting point) |
| Too many gridlines | Chart looks like graph paper | Click chart → + button → uncheck "Gridlines" or click a gridline and press Delete |
| Chart is too small to read | Text and numbers are tiny in the memo | Resize the chart in Excel before copying (drag the corner handles). Charts should be at least 4 inches wide in your final memo |
What Makes a Chart Good vs. Bad
The fundamental rule: A chart is evidence for a specific argument. If you can't point to a sentence in your memo that the chart supports, the chart shouldn't be there.
Part 3: Common Mistakes
| Mistake | What It Looks Like | Fix |
|---|---|---|
| Burying the recommendation | BUY/HOLD/SELL appears on page 2 | State it in the RE line and the first paragraph |
| Vague language | "Strong growth" with no numbers | Replace every "strong/significant" with a specific figure |
| Disconnected charts | Charts appear but are never mentioned in the text | Each chart should be cited by a specific thesis point |
| Listing facts without arguing | "Revenue was $1,036M. Net income was $50M. Debt was $423M." | Connect facts to your thesis: "Revenue reached $1,036M, surpassing pre-pandemic levels, which supports our growth thesis" |
| Ignoring counterevidence | A BUY memo that never mentions declining margins | Address negative data in Key Risks and explain why it doesn't change your recommendation |
| Charts without labels | No title, no axis labels, no units | Every chart needs: descriptive title, labeled Y-axis with units, readable text |