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

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

Company Analysis ManagementService/Products Financial Health Stock Price Evaluation LOOK AT YOUR LIST OF TERMS!!! LOOK AT YOUR LIST OF TERMS!!!

AIG – American International Group

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

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

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

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

Financial Health $64B revenue in % 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)

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

Stock Price Evaluation Previous close38.07 Today’s open38.28 Day’s range

Stock Price Evaluation cont. Earnings growth (last year)-18.48% Earnings growth (this year) % Earnings growth (next 5 years)+10.00% P/E ratio2.5 EPS$1.64

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

Apple

Apple, in the past 6 Months

“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

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

Apple: Management

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

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)

Apple vs. Google

Apple vs. Industry leader

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

MACD

Home Depot

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

Key Statistics Fiscal year ends: Feb. 2 nd 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: Number of shares of common stock outstanding: $1,523,263,533

Industry Sector: Services Industry: Home Improvement Stores- 11 Stocks Home Depot vs. the industry leader (KGF.L) 1.Market Cap comparison 2.Price per share 3.Price/Earnings Ratio

Industry Continued

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

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

Smith & Wesson

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

NASDAQ Dozen

Revenue-Pass

Earnings Per Share-Pass

Return on Equity (ROE)- Fail

Analyst Recommendations-Pass

Positive Earnings Surprises-Pass

Earnings Forecast-Fail

Earnings Growth-Pass

PEG Ratio-Pass

Industry Price-Earnings

Days to Cover-Fail

Insider Trading-Pass

Weighted Alpha

Strength of Company Stock Pass: 8 Fail: 4 8:4Moderate