Researching Stocks_[1]

Part I - How to Find a Stock

Before you can begin choosing a stock portfolio, you need to do your research about companies that fit your investment objectives.  Along with examining past and present performance, you should also look at what's going on with a company's product, how their financial statements look, if there are any potential changes in leadership, what's happening in the industry, and any news about the particular company, industry, or the economy in general that may affect your stock's growth.  In this lesson, you will learn and practice finding stock symbols for companies from the Internet. Using stock symbols is a key to find necessary company information such as stock charts, news, and financial data on the Internet

Background: The stock symbol is used to identify a company’s stock with a unique name assigned by stock exchanges worldwide. Do not confuse the stock symbol with the abbreviated name usually found in the financial section of most newspapers. For example, here is a sample of the stock symbol for various corporations worldwide:

Task:

Find the stock symbol of the following companies using Yahoo! Finance http://finance.yahoo.com under symbol lookup or alphabetical listing.

Find the stock symbol by industry under Stock by Industry on the symbol lookup page in Yahoo! Finance http://finance.yahoo.com/. For each industry, find the top three companies by market capitalization and their symbols.  You will need figure out which sector each industry is in first.

Industry: Computer Networks

Industry: Paper & Paper Products

Industry: Footwear (come on! weren't you expecting this!)

Industry: Railroads

Industry: Life Insurance

Use Yahoo! Finance http://finance.yahoo.com/ under International => Major World Indices to find the following stock symbols. (hint: look at components)

Part II - Interpreting On-Line Data

Background:  Online stock quotes provide important data for investing.  To get stock quotes is just like shopping in a supermarket checking on price tags for items on the shelves prior to the purchase.  The quotes in this section are from the stock exchanges worldwide via the Internet delayed at least 20 minutes. Below is a typical stock quote table from Yahoo! In addition, there are links such as news, profile, research, and more providing important information to make decisions in choosing a stock in this game.

Attached to the bottom of this handout is a list of vocabulary words found in the above chart that will help you interpret their meaning.  In addition, we will go over this information in class.

Task: Go to Yahoo! Finance http://finance.yahoo.com/ to get detailed stock quotes for Intel Corporation and answer the following questions.  Pull up the CURRENT price information on Intel to answer the questions below:

1. What is the name of the stock exchange Intel is presently trading on now?

2. How much would you have to pay for one share of Intel if you bought the stock at this moment?

3. What was yesterday’s closing price for Intel?

4. How many shares of Intel were traded since the market was open this morning?

5. How many shares of Intel are traded daily on average?

6. How much did Intel earn per share in the last year?

7. The price-earning ratio, P/E  of the stock market is approximately at 26.  How many times is Intel’s P/E above/below the market?

8.  Does Intel pay a dividend?

9. If you bought 10 shares of Intel at the lowest price of the year and sold it at the highest price for the year, how much money would you make?

10. If you bought 100 shares of Intel at the current price but missed the chance to buy the shares at the lowest price for the day, how much more money would you have to pay?

11. What is Intel’s market cap?

 Part III - Stock History

Get a 5-year chart  from Yahoo! Finance for Intel.

1. How many times has Intel had a stock split during the last 15 years?

2. If you bought 100 shares of Intel in 2005, how many shares would you have now? Click onto the vs.

S&P link on the bottom right hand corner of the chart.

 3.  Intel and the S&P index were at the same value at mid-year 2004.  Approximately, how many percent did Intel underperform the market (S&P) at the current share price?

4.   Is Intel’s current price above or below its 50-day moving average?  200-day moving average?

Note: If the share price is above the 50-day or 200-day moving average, investors will expect the price to go even higher due to upward momentum.  The opposite is true if the price is below the moving averages.

Click on “Profile” in the stock table and answer the following questions:

1.        What is Intel’s main business?

2.        What were Intel’s top line (revenues) and bottom line (net income) growth in the recent financial reporting period?

3.        Is Intel a strong growth company? Why?

4.        Who is the president, CEO, of Intel?

5.        What was the closing price for Intel 3 months ago (click on historical data)?

6.        How many percent of shares do insiders (management and directors) own?

Part IV -Your First Stock

Now, think about the things you do, wear, or use everyday and choose one product.  What corporation manufactures or provides that good?  You can use snowboards, cars, gasoline, athletic shoes, or anything else you are familiar with.

Find that company's ticker symbol.

1.   What is your company's main business?

2.        What were your company's top line (revenues) and bottom line (net income) growth in the recent financial reporting period?

3.        Is your company a strong growth company? Why?

4.        Who is the president, CEO, of the company?

5.        What was the closing price for your company 3 months ago (click on historical data)?

6.        How many percent of shares do insiders (management and directors) own?

7.       Has your company had any stock splits in the past five years?  If so, when?

8.       If you had purchased 10 shares of your company's stock on January 1, 1997, how much money 

 would you have lost or made if you sold the stock at yesterday's prices?

Print off the chart showing your company's past five year's performance and the company profile and attach it to this worksheet.

Glossary of Stock Quotes

52-Week High
The highest price for a stock during the past year.

52-Week Low
The lowest price for a stock during the past year.

Ask
The price at which a holder of a stock is willing to sell.

Bid
The price at which someone is willing to buy a stock.

Change
The dollar difference between the preceding day's closing price and the most recent price.

Day's High
The highest price of the stock during the current day's trading.

Day's Low
The lowest price of the stock during the current day's trading.

Dividends Paid per Share
The cash payment per share made by the company to its shareholders.

Earnings Per Share (EPS)
Net income divided by common shares outstanding.

Exchange
The market place that provides for the trading of the listed stocks.

Last Trade
The current trading price of one share of a company’s stock.

Market Capitalization (Market Cap)
The value of a company's outstanding shares, as measured by shares times current price.

Moving Average
An average calculated every new period by putting in latest value and taking out oldest value of previous period.

Nasdaq (National Association of Securities Dealers Automated Quotation)
The largest market without a central exchange that is broker/dealer-based. Trading is done using telephones and electronic terminals.

NYSE (New York Stock Exchange)
The largest stock market based on market capitalization.

Open
The price paid in a stock's first transaction of the current trading day.

P/E Ratio
Also known as the P/E multiple, this is the latest closing price divided by the latest 12 months' earnings per share.

Percent Change
The percentage difference between the preceding day's closing price and the current price.

Previous Close
The price of the stock at the end of the previous day's trading session.

Shares Outstanding
The total number of a company's publicly traded shares.

Volume
The total shares of a stock traded on the most recent trading day.

Yield
The dividend paid on a given stock based on its current price.

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