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high company earnings
A stock price that is relatively low in spite of the company’s pretty strong earnings may indicate that a slow down is anticipated in that company or within that industry.
low share price
low P/E
high share price high P/E
A stock price that is high in spite of a company’s low earnings, may indicate that growth is anticipated within that company or industry. For example, many tech stocks have high PE ratios. The company may not be making much profit, but there is anticipation that the company or industry will grow and is a good investment.
low company earnings
Engage students in a discussion. Put on your investor thinking caps: You are an investor deciding between two stocks. One is the stock of a car parts manufacturing company. It’s selling for $32.00 per share; its earnings are $2.95 per share. The other is the stock of a farming and agricultural equipment company. Its shares sell for about $90.00 and its per share earnings are about $8.90. Based solely on P/E ratios, which would you buy? Answer: In spite of these stocks having very different prices and being from different sectors and industries, they have about the same value based on their P/E ratios: ( = 10.84; = 10.11) Change the numbers and explore P/E ratios. H Vol Volume refers to the number of shares traded in any given time. Volume is tracked because significant changes tell an investor whether a company’s stock is in demand, or if investors are unloading it. It may signal that something is going on with the stock that warrants a closer look. Engage students in a discussion: Put on your investor thinking caps. What doesn’t this number tell you? Answer: It doesn’t indicate how many shareholders have bought or sold the stock. Unusual trade volumes could be the result of a couple of institutional investors trading a large block of shares, or many individuals buying or selling shares. Many charts are interactive allowing investors to monitor volume. I Hi/Low Hi and low indicate the highest and lowest price of the share on the last trading day . These highs and lows can be compared with other days to get a picture of how the stock has been performing (trending) over time. SLIDE 15J $32.00 $2.95 $90.00 $8.90 PRODUCT PREVIEW
J Close That is the final price a security trades for on the given trading day.
289 THE 21st CENTURY STUDENT’S GUIDE TO FINANCIAL LITERACY
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