The Missouri SMG™ Investment Research Project competition begins at the regional level and progresses to the state level, where each 1^st place regional entry will be judged by a panel to include members of the securities industry and the economic education community. Students are encouraged, individually or in teams, to analyze the economy, research the securities market, and examine the question of "what makes a successful company?"

1. Objectives

• The Missouri SMG™ Investment Research Project will enable the participants to:

• Demonstrate knowledge and understanding of the basic economic concepts related to stock markets.

• Demonstrate proficiency in the use of decision-making and reasoning skills.

• Students must report on a stock in their current Missouri SMG™ portfolio.

• An individual or a Missouri SMG™ team of five or less students may submit entries.

• All entries must include:

• A completed entry form (attached)
• Original essay
• Visual Aid (for example, but not limited too: a Display board, art project, scrapbook, and/or a Microsoft Power Point presentation).

3. Procedure

• The enclosed entry form must be submitted for each entry, filled out in its entirety.

• A Missouri SMG™ Teacher / Advisors may submit their best projects to the Program Director for judging in their regional competition. Winning projects will then be forwarded to the state competition for judging.

• The judges’ decision at the regional and state levels is final.

• Recognition will be given in each category:

• State 1^st Place Elementary/ Middle School
• State 1^st Place Secondary

5. Deadlines

• Entries must be sent to:

Team Number: _______________________________________________________

Region: _____________________________________________________________

School Name: _______________________________________________________

Teacher’s Name: _____________________________________________________

Date: _______________________________________________________________

You may choose any stock listed on the New York Stock Exchange (NYSE), American Stock Exchange (AMEX), or NASDAQ market that is currently in your SMG™ portfolio. (No Mutual Funds Please.) You might want to choose a company you are already familiar with. Do you have a favorite store, food, or restaurant? Which companies produce the entertainment you like? What products are popular today? You can find most of the information you need at an Internet site or on a newspaper financial page.

Company Name: _____________________________________________________________

Industry: ___________________________________________________________________

Products and Services: _______________________________________________________

Company Ticker: ____________________________________________________________

Exchange where Stock is Listed: _______________________________________________

What was the stock’s price when you bought it? _______________       Date ____________

What is the stock’s price now? ____________________________        Date_____________

What was the stock’s P/E ratio when you bought it? ___________        Date_____________

What was the 52-week high for the stock? ___________________        Date_____________

What was the 52-week low for the stock? ____________________        Date_____________

Using the company’s annual report, Value Line, Standard & Poor's, and/or numerous on-line sources, answer these question.

1. What is the current P/E ratio? _________ How does this compare to the P/E’s of other firms in the industry? _______________________________How does this compare to the P/E’s of other firms on this exchange?_______________________________________________________________
    
2. What are the earnings per share of stock? ________________________________
    
3. What is the annual rate of growth of earnings per share for the last year? _____%, For the last five years? _______%
    
4. What is the return on shareholder’s equity? _________ How does this compare with the return on equity of other firms in this industry? _____________________________
   How does this compare with the return on equity of other firms on this exchange? __________________________________________________________________
   __________________________________________________________________
    
5. What is the long-term debt as a percentage of shareholder’s equity? _______________
   How does this compare to other firms in the industry? ___________________________
   Is this a dangerous level of debt? __________________ Why or why not? ___________
   ______________________________________________________________________
   ______________________________________________________________________ ______________________________________________________________________

Based on the information you have gathered, write a brief essay (not more than one single-spaced typed page) on whether or not you would purchase this stock for the short run (less than one year) or the long run (more than one year). A good essay must consider the data you have compiled in earlier sections.

The SMG™ Program is a motivating approach to learning the basics of saving and investing. It provides a framework for teaching about the American economy.

Although the school calendar limits the duration of the SMG™ Program, it serves as a tool to spark a broader interest in how our economy works and how to choose good investments. A good economic education program must focus on sound long-term investing. A long-term perspective allows investors to stay on course even when financial markets are declining. Research shows long-term stock investors consistently outperform short-term traders. Stocks have outperformed all other investment over the long run.

To be successful at investing, students must learn to choose successful companies in a variety of economic and market conditions. This involves much more than following short-term price movements and the latest investment trends. We must teach students the knowledge and skills to investigate companies before they invest in their common stocks.

The Missouri SMG™ Investment Research Project helps students learn how to analyze the economy, research the securities markets, and determine what to look for in a successful company. Students develop sound strategies that they can use in choose future investments. The winning entries are judged on the student’s level of analysis, not on the short-term performance of the stock that they are analyzing.

Here are the teaching resources and tips for each section of the SMG™ Investment Research Project.

Most of the data needed for this section of the SMG™ Investment Research project can be obtained from a daily newspaper’s stock pages or from links on the SMG™ website.

Lesson 23, "Business Cycles and the Stock Market," Learning from the Market, pages 257-266, prepares students for this section. This lesson demonstrates how market averages can change as stock buyers anticipate changes in the economy. It relates the business cycle to stock prices. There are two straightforward questions in this section, and the students should keep their answer simple.

One reason why long-term investors outperform short-term traders is that market is that market conditions are hard to predict. God created market forecasters to make weather forecasters look good. Nevertheless, domestic and international events can change stock prices in general as well as the price of a particular stock. The succinctly-titled Lesson 24, (How do domestic and International Events Influence the Buying and Selling of Stocks?" Learning from the Market, pages 236-250, illustrates how events change the demand for a stock and the various stock market averages.

Picking a company you know is the first step to successful investing. However, people may be lined up to buy a company’s products or services, but the company could be mismanaged. When students buy a corporation common stock, they are buying part of the company. People own stock in a corporation to share in the profits so certainty and growth of profits is the key to sound analysis. Good stock pickers must crunch some numbers.

Lesson 20, "How Do Businesses Obtain Financing," Learning from the Market, pages 223-230, and Lesson 21, "How to Read an Annual Report," Learning from the Market, pages 236-250, prepare students for this section. These lessons contain detailed explanations of the ratios in this section of the research project and also provide an interpretation of the meaning of these ratios.

All of the data needed for this section can be obtained from a corporation’s annual report, which is required for any public corporation. Students should skim the glossy pages, which can be interesting but useless. It is the consolidated balance sheet, consolidated income statement, and multiyear financial summary where the important information is found. Of course, the current P/E ratio can be found in the newspaper.

Comparing a firm to the industry involves going beyond the annual report. However, there are many sources for this information, including Standard & Poor’s Reports and the Value Line Investment Survey. Here are some other useful research resources:

Access to annual reports and SEC documents on-line for free. You can view the documents exactly as they appear in printed form.

1-800-578-7888

Instant access to full-text news releases of about 4000 public companies faxed to you free.

Written reports can be obtained from a stockbroker or public library. The S&P reports and much more are available on the Standard & Poor’s Personal Wealth Web Site at www.standardpoor.com.

1-800-833-0046

Classifies 3500 stocks by industry. Updated quarterly. Historical information for each stock is provided on one page of data in the form of a technical chart and table, supplemented by an updated editorial by a Value Line analyst who ranks each stock for its timeliness. Also provides the names, addresses, and phone numbers of key officers. Each section begins with a Value Line analyst’s industry summary and outlook. The Value Line Investment Survey is available in most libraries.

1-800-654-2582

For companies in the Wall Street Journal "Money and Investing" section with a club symbol next to their names. Free annual reports and, if available, quarterly reports by mail. Call 1-800-965-5679 to fax a request.

This section calls on student’s analytical skills. Lessons 20 and 21 are useful here, and so are the power of observation and common sense.