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Middle School Stocks

I know, teenagers rant. Here’s one rant that might be beneficial. I recently was interested in starting an investing club at my school. That shouldn’t be a problem, right? It’s all about an important topic - money, and how to make money without getting up from your couch. But, I can’t think of a single person who would attend. Harry Potter club has a 5:1 person to chair ratio, even Student Council can be overflowing with kids.


Granted I live in Minnesota and it’s freezing and that’s their excuse to avoid going outside. Girls my age tend to only care about boys right now and if they have any interest in money they haven’t spoken up about it. Yes, in middle school if someone mentions the word money everyone’s response is “I’m broke, lol.” Is it now cool to have no money? I can tell you it won’t be later.


Don’t parent to produce consumers. Let me explain, let’s talk about Kate Spade. Any parent with a teenage daughter is probably closing this tab and thinking I don’t want to hear about that $500 purse. It’s awful expensive I know, but Kate’s stock isn’t, her P/E Ratio is 17.9 which is much cheaper than the purse. So, why not get the stock instead? The stock will last as long as you want, the purse will last until you drop it. Kate Spade’s stock will probably grow in value, the purse will only last until a new one comes out. The stock will keep growing, but the purse is only used to carry around money that you’re going to spend. Here’s another fun fact, for every $500 purse you buy the company gets $300.


Now that you have the purse you need the shoes, right? We are going to look at the company Deckers Outdoor Corp, it owns UGG, a well-known shoe company. UGG sells $100 shoes. Every girl has at least two pairs of UGGs that they wear constantly. Their stock is also cheaper than the actual product.


VF Corp owns brands like Vans, North Face, JanSport, Eagle Creek. Vans is a very stylish brand. The North Face is the classic store to buy winter gear. Almost every person I know in middle school owns at least a sweater from North Face. This is the first stock that actually pays a dividend.


I’m going to switch my perspectives from ranting to numbers. We are going to compare each company’s Price to Earnings Ratio (P/E Ratio), Gross Margin, Dividend Yield, Return on Equity (ROE), Debt.


Companies
P/E Ratio
20 or lower
Gross Margin
25% or higher
Dividend Yield
2-5%
ROE
15% or higher
Debt
Less than 1.0
VF Corp
18.4
48.4%
2.88%
21.9
0.5
Deckers Outdoor Corp
16.8
45.7%
---
12.5
0.2
Kate Spade
17.9
60.2%
---
50.0
1.1


The overall winner is VF Corp or North Face, they passed every hurdle. If you invested in VF Corp 22 years ago with an original investment of $1,000. Your compound interest today would end up being $3,917. In conclusion, I believe it is better to invest $500 in stocks so it can grow, then a $500 on a purse that will last a month.  

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