student research - Smgman

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Student Research

It is important to remember we are not teaching our students to become stock brokers. My goal is to teach them about long-term investing and to help them in making decisions about retirement and other long term investments.

In the pages to follow I have listed some of my ideas for student research. Remember most students have little experience with the stock market. The more research you have them do equates to more time for them as well. So you want to keep it simple!

I have added a table of contents which will help you navigate through the PowerPoint.

Table of Contents

Pg 3:

Idea # 1

Pg 4:

Idea # 2

Pg 11:

Headlines

Pg 12:

Profile

Pg 19:

Big 5 Sporting Goods

Pg 20:

Game Stop

Pg 5:

Idea # 3

Pg 6:

Changes in stock price

Pg 13:

Industries

Pg 14:

AT&T example

Pg 21:

Celgene

Pg 22:

McDonalds

Pg 23:

Quest for Perfection

Pg 7:

Changes in stock price

Pg 15:

AT&T cont.

Pg 8:

Using internet

Pg 9:

Co. Summary

Pg 10: Stock charts

Pg 16:

Pg 18:

Arena example

JP Morgan example

Pg 24:

Trinity Biotech

Pg 17:

McDonalds example

Pg 25:

International Game

Pg 26:

STUDENT RESEARCH – idea # 1

[1] Idea #1

(elementary, new teachers, or crunched for time)

Keep it simple!

Have your students talk about what restaurants, retail shops, & favorite mall shops they and their parents like to frequent.

Ask them to explain: why “like” this store over a different store?

What makes these restaurants & stores better than their competitors?

Why McDonalds over Burger King?

Why Old Navy over GAP?

Why Target over Walmart?

Why Home Depot over Lowes?

Let them buy stock of these companies and follow the progress of each stock.

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STUDENT RESEARCH – idea # 2

Idea #2: Look at a companies risk level

(this can be done with idea #1 or combined with a future idea)

A

BETA of 1 indicates that the security's price will move with the market. A beta of less than 1 means that the security will be less volatile than the market. A beta of greater than 1 indicates that the security's price will be more volatile than the market. For example, if a stock's beta is 1.2, it's theoretically 20% more volatile than the market.

Many utilities stocks have a beta of less than 1. Conversely, most high-tech Nasdaq-based stocks have a beta of greater than 1, offering the possibility of a higher rate of return, but also posing more risk.

Price-to-earnings (P/E):

A company’s net earnings are important, of course, since the figure represents how much money a company is making. A company can borrow money when times are lean or if the business needs to expand, but over a sustained period of time, the company must have earnings in order to remain a viable business. As such, earnings represent one of the main numbers to which an investor might pay attention, when analyzing a company’s stock. The P/E ratio is important to investors, because the higher the number, the more expensive the stock is

in terms of earnings. Most healthy companies whose stock is in good demand will have P/E ratios in the range of

perhaps 8 to 22. While there are not hard and fast boundaries, the P/E ratio is one of several factors investors use to gauge a stock’s underlying value.

The Beta & P/E ratio can be found when first logging a ticker symbol on to www.finance.yahoo.com

Lessons for P/E ratio can be found in the Teacher Support Center. Once you log in scroll down “In The Classroom” and click on Lesson Sequence. Click on Show all lessons. Scroll down the list of lessons until you find P/E ratio. You can also find “Stock Talk” for both beta and P/E in the Teacher Support Center.

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STUDENT RESEARCH – idea # 3

Idea #3: Diversification

(this can be used with Idea # 1 or #2 or both)

Looking for stocks that diversify your portfolio. You might try and have your students buy some mutual funds and bonds as well.

As far as stocks go it is important to think about buying stocks that are in different industries/sectors and a difference in size of company helps too.

What I think is important here are four major contributors to diversification.

Industry – diversify across industry/Sector

Market cap – small, medium & large cap companies

Investment Vehicles – stock, bonds & mutual funds

Fund value distribution – monetary distribution

What I do with my 6 th graders is have them buy 1 mutual fund, 1 bond and pick 8 stocks.

They purchase two stocks each from four-different Industries.

They must have 3 stocks from small cap, 2 mid size and 3 large cap stocks.

Finally I have a 10,000 rule. Each stock, bond, & mutual fund must not exceed $10,000, when purchased.

10,000 ÷ (stock price) = Quantity of shares a student can purchase

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What Can Cause Changes in the Prices of Stocks?

No one can really predict which stocks will increase or decrease. But there are a lot of good hints out there-you just have to know where to look for them. Here are some things to think about.

(this information is good to use both before and after a stock has been purchased. Headlines for companies can be found after you enter the company ticker symbol at www.finance.yahoo.com

)

Laws:

The government can pass laws that will effect companies. If laws are passed that people cannot buy cars that use a lot of gas and create a lot of pollution, the companies that produce those cars will make less money, and fewer people will want to own their stocks. The prices will go down.

Companies that make nonpolluting cars will have better sales and earn more money. The high demand for their stocks will cause the price of each share to go up.

New Discoveries

: New discoveries in medicine are found every year. A medicine to cure the common cold would be great for most of us & for the drug company that sells the medicine. Its stock would go up. But what about the companies that make tissues, nasal sprays and cough drops? What might their stock price do?

Weather:

If there is a frost in Florida, there will be fewer oranges available. Companies that sell oranges will not have enough to sell and those companies will make less money. Their stock might go down. On the other hand a lot of snow would be good for those companies that make snowblowers, shovels, snow boots, skis, and snowplows. The price of theirs might go up. What about hurricanes?

Can they help businesses or just hurt businesses?

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What Can Cause Changes in the Prices of Stocks?

Current Events

: Even terrible situations like war can have an influence on the price of stocks.

Companies that make the equipment for tanks, guns, and fighter planes have more business when a country is at war.

The General Economy:

When the country is doing well & companies are making good profits, they may hire more people and pay higher salaries. People may use their extra money to go on nice vacations, to buy bigger homes, or to buy clothes and jewelry. On the other hand, what

might happen if things are not so good?

Negative Publicity:

A news article about how some cosmetics companies test their products on animals might result in many people refusing to buy products from those companies. Can you

think of some examples of positive publicity that might help a company?

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Using www.finance.yahoo.com

Ticker symbol

On the left of the screen there is more links for information

about CMG.

Basic charts

Headlines

Profile

Competitors

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In the summary

• you can find

stock price

Beta

Volume

Market Cap

P/E

EPS

Div/Yield

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Summary

Basic charts allows you to see historical prices.

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Basic Charts

Here you can get caught up on the latest news of your favorite company.

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Headlines

In the profile you have a link to the co. website and industry type

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Profile

You can find the company website on the is page

To find a list of Industries go to www.finance.yahoo.com

and scroll down Investing. Click on

Industries and you can find virtually every publicly traded company by industry

.

scroll down Investing

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AT&T:

A good long-term investment

Investing in companies that offer a dividend.

AT&T has been a solid company for many years. It also offers a 5% dividend

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AT&T: A great example of a long-term investment. Along with growth over time, AT&T offers a 5% dividend yield ($1.76 per share). Notice the black triangles….those represent stock splits. A 100 shares bought before 1987 would become 1,200 shares after the last stock split. Notice the best growth years were during the stock split years.

Splits: May 26, 1987 [3:1], May 26, 1993 [2:1], March 20, 1998 [2:1]

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On June 27, 2012 Obesity drug approved by the FDA. This is the first time in 13-years that this type of drug has been approved by the FDA. The stock increased by 25.54% as of 3:00pm. Reading the daily business headline is very important when tracking companies.

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McDonalds stock is down 12% from January. One reason might be the departure of their long-time CEO. However, many analyst see MCD as a buy because of strong earnings and revenue growth this year. (June 27, 2012)

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JP Morgan: Losses on its recent bungled trade could far exceed earlier public estimates, according to sources. CEO Jamie

Dimon announced in May that the bank had lost $2 billion. The stock price decreased from $46 to $36.

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Big 5 Sporting Goods is upgrading its merchandise mix to attract customers and boost sales and profits. The changes could beckon investors, too

. -

Barrons

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New titles in the Halo and Call of Duty franchises -- both dependable bestsellers -- are slated for launch this month, as is the next generation of

Nintendo Wii gaming consoles. GameStop is also poised to get a big Christmas sales boost from Apple's new crop of iPhones and iPads. - Barrons

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Drug maker Celgene (CELG) generates more than two-thirds of its sales from

Revlimid, a treatment for blood cancer. Doctors have been prescribing the drug for earlier and longer treatments, and demand is expanding overseas. That helped drive third-quarter sales up 14% and propelled adjusted earnings per share 26% higher. - Barrons

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The world’s largest burger chain has reported several uncharacteristically disappointing sales results in recent months, showing that rising competition has affected

McDonald’s business. - Wall St. Cheat Sheet

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Quest for Perfection

– Motley Fool

Growth. Expanding businesses show healthy revenue growth. While past growth is no guarantee that revenue will keep rising, it's certainly a better sign than a stagnant top line.

Margins. Higher sales mean nothing if a company can't produce profits from them. Strong margins ensure that a company can turn revenue into profit.

Balance sheet. At debt-laden companies, banks and bondholders compete with shareholders for management's attention. Companies with strong balance sheets don't have to worry about the distraction of debt.

Money-making opportunities. Return on equity helps measure how well a company is finding opportunities to turn its resources into profitable business endeavors.

Valuation. You can't afford to pay too much for even the best companies. By using normalized figures, you can see how a stock's simple earnings multiple fits into a longer-term context.

Dividends. For tangible proof of profits, a check to shareholders every three months can't be beat. Companies with solid dividends and strong commitments to increasing payouts treat shareholders well.

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Trinity Biotech is rolling out new products to diagnose and control diabetes, a growing global scourge. With sales and profit rising, the shares could rise 50%. - Barrons

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Analysts on average see the stock headed to $20, for upside of more than 35%, as cash-strapped states from Kansas to Maine approve more casinos and slots in a desperate search to boost revenue. - Barrons

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Shares of Men's Wearhouse came apart at the seams last week after the retailer of men's tailored clothing reported disappointing third-quarter earnings and sharply reduced its fourth-quarter and full-year profit guidance.

The stock opened 12.5% lower on Thursday morning, and ended the week off

6%, at $30.48. Men's Wearhouse is well positioned to capitalize on several positive trends, including a better employment outlook and updated, slimmer-fitting fashions, that are driving more men to -- yes, shop. Don't believe us? Prices for men's apparel have climbed by more than in any year since the late 1980s, an indication of strong demand. And department stores such as Macy's (ticker: M) and Nordstrom (JWN) have said men's clothing is among their fastest-growing departments.

LIST OF INDEXES/OTHER

Below you can link to well known Indexes or other sites containing list of companies or mutual funds

.

DOW JONES INDUSTRIAL: http://finance.yahoo.com/q/cp?s=^DJI+Components

Russell2000: http://www.russell.com/indexes/documents/Membership/Russell2000_

Membership_List.pdf

[this list contains small cap companies]

S&P 500: http://money.cnn.com/data/markets/sandp/

[this list contains small, mid, & large cap companies representing all sectors]

List of Sectors/Industries of companies:

http://biz.yahoo.com/ic/

NYSE:

http://www.nyse.com/

NASDAQ:

http://www.nasdaq.com/

The Street:

http://www.thestreet.com/

Mutual Funds: http://biz.yahoo.com/p/top.html

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