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Stock Trading 102 Seminar

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  1. Stock Trading 102 Seminar Arlen Novelli, Sesame Chen, Stefan Filipovic and Abby Holtan

  2. Stock Market Success • Understand goal • Generate idea • Avoid gambling mentally • Follow economic indicators

  3. Company Analysis • Management • Service/Products • Financial Health • Stock Price Evaluation • LOOK AT YOUR LIST OF TERMS!!! 

  4. AIG – American International Group

  5. Company Overview • Multinational, operates in more than 130 countries. • 88 million customers. 62,000 employees. • “Together, we’re working to help see, build, and secure a better future for everyone.”

  6. Management • Robert H. Benmosche-President and Chief Executive Officer. • 7M Annually • 2009 • Alfred University • New York

  7. Services and Products • Accident and health. • Annuities. • High Net Worth. • Insurance. • Marine and Inland Marine. • Travel. • Warranty.

  8. Competition • Met Life, Inc. $36.43 • Traveling Companies, Inc. $81.46 • Manulife Financial Corp. $14.95 • Aflac, Inc. $51.01

  9. Financial Health • $64B revenue in 2011. • 30% of revenue out of the USA and Canada. • Recently paid off debt with the US government. • Total of benefits, claims and expenses. • $65,302 (2011) $59,590 (2010)

  10. Financial Health cont. • Year-end balance sheet data: • Total assets 555,773 • Total investments 410,438 • Total liabilities 441,444 • Total AIG shareholders’ equity 104,951 • Total equity 105,806

  11. Stock Price Evaluation • Previous close 38.07 • Today’s open 38.28 • Day’srange38.21 - 38.90

  12. Stock Price Evaluation cont. • Earnings growth (last year) -18.48% • Earnings growth (this year) +271.81% • Earnings growth (next 5 years) +10.00% • P/E ratio 2.5 • EPS $1.64

  13. Methods • Public information – Financial • Stocks, Finances, Market, Investments.

  14. Apple

  15. Apple, in the past 6 Months

  16. “you should never invest in any idea that you cannot illustrate with a crayon.” “ The only value of stock forecasters is to make fortune tellers look good. “ --Warren Buffett

  17. Apple: product, service • More innovative • Sleek design • Novel software • Good quality • Product integration • Perfect service

  18. Apple: Management

  19. Analyses for Apple • Fundamental analysis—used for test if you pick the right stock • Technical analysis—appropriate the right time and price to buy it

  20. Analysis for apple • Fundamental analysis • Profitability ratios • ROA may not used for personal computer industry • Valuation Rank • Compares earning, cash flows and sales to market value (intrinsic value & market value)

  21. Apple vs. Google

  22. Apple vs. Industry leader

  23. Technical analysis • Technical analysis • Extremely complicated • MACD, KDJ, BOLL, etc • Affected by psychology of shareholders • Data only, no industry background needed

  24. MACD

  25. Home Depot

  26. Background • What is Home Depot? • Current chairman and CEO • HD Supply • Competitors • Major shareholders • Recent Activity

  27. Key Statistics • Fiscal year ends: Feb. 2nd • Total market capitalization for all publically traded companies: $15,640,707,100,000 • Total market capitalization for Home Depot, Inc.: $103.80B • Price/Earnings Ratio: 23.39 • Number of shares of common stock outstanding: $1,523,263,533

  28. Industry • Sector: Services • Industry: Home Improvement Stores- 11 Stocks • Home Depot vs. the industry leader (KGF.L) • Market Cap comparison • Price per share • Price/Earnings Ratio

  29. Industry Continued

  30. Financial Health • Total Revenue- $70,395,000 • Cost of Revenue- $46,133,000 • = Gross Profit= $24,262,000 • Total Current Assets- $14,520,000 • Total Assets- $40,518,000 • Total Current Liabilities- $9,376,000 • Total Liabilities- $22,620,000 • Total Stockholder Equity- $17,898,000 • Total Operating Expense- $18,755,000 • Total Debt- $10,788,000 • Total Cash Flow- $6,651,000

  31. Determining Financial Health • Total Cash Flow- $6,651,000 • Cash Flow Growth Rate- 10.28% • Earnings Growth Rate- 13.40% • Debt-to-equity ratio- 0.6073(2012)0.6027(2011)0.5161(2010) • Return on equity- 25.42% • Gross Profit Margin- 34.37%(2012)34.27%(2011)33.87%(2010)

  32. Smith & Wesson

  33. Smith and Wesson • History of the Company: • Horace Smith and Daniel B. Wesson • First partnership in 1852 • Second in 1856 • Introduced the Model 10

  34. NASDAQ Dozen

  35. Revenue-Pass

  36. Earnings Per Share-Pass

  37. Return on Equity (ROE)-Fail

  38. Analyst Recommendations-Pass

  39. Positive Earnings Surprises-Pass

  40. Earnings Forecast-Fail

  41. Earnings Growth-Pass

  42. PEG Ratio-Pass

  43. Industry Price-Earnings

  44. Days to Cover-Fail

  45. Insider Trading-Pass

  46. Weighted Alpha

  47. Strength of Company Stock • Pass: 8 • Fail: 4 • 8:4 • Moderate