Case Study: Apple Stock 101 for the Apple Store Employee

Case Study Apple Shares for the Apple Store Employee 1

My brother recently got a job at the Apple Store. One of the perks of working at the Apple Store – not including the discounts you get on purchasing Apple products – is the employee stock purchase plan. Once you pass your probation, you are allowed to purchase Apple shares at a 15% discount up to 10% of your salary per year. I would absolutely love to purchase Apple shares at a 15% discount. Alas, I am not an Apple employee. However, my brother is. He told me recently about how his co-workers were freaking out about the plummeting share price and were trading insightful stock tips such as panic selling shares now before it falls further. Sigh. This case study is for my brother, to educate him on the wonderfully profitable enterprise he has found himself working for, and to all Apple employees who, I assume, have no idea what their shares represent (hint: it is not merely some piece of paper that gyrates wildly in value second-by-second along a ticker). This is Apple stock 101 for the Apple Store employee.

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Case Study: Financial Ratios and 3 Major Confectionery Businesses

financial ratios of confectionery businesses xThis recent article on the Tootsie Roll company over at The Conservative Income Investor had me mulling over the confectionery industry. Let’s take a look at 3 of the major confectionery businesses: Hershey, Mondelēz, and Tootsie Roll. We’ll gather 4 years worth of data off Google Finance (2011-2014) and analyze some of the basic financial ratios associated with each. Then, we’ll see which one of the three is the most attractive investment opportunity based on this data set.

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Case Study: Peak Earnings, Value Traps, Cyclical Industries, and Chevron

peak earnings value traps cyclical industries 3As I was running and making zero forward progress on the treadmill last night (as part of the marathon training we are going through at the moment), I had the Nightly Business Report playing on PBS as I usually do when I run on the treadmill and a light bulb in my brain suddenly clicked – a file cabinet in my brain sprung open, information coalesced, and the problem I had been thinking about on and off for several months made crystal clear sense. I had been chewing over the problem of cyclical industries and the dangers of peak earnings and investing value traps. What was puzzling me was that, although it made perfect theoretical sense to me at an instinctual level when I read about it, I just couldn’t fully master it, if that makes any sense. I was missing a vivid example that resonated with me, an example that would make it all come together in a clear, coherent picture. Running, pondering about our energy holdings, and the Nightly Business Report segment on oil last night made it all come together.

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Case Study: Coca Cola as an Example of Analyzing Investment Opportunity Cost with the Earnings Yield

the earnings yield of coca cola (2)Coca Cola, one of the bluest of the blue chips. This is a foundational pillar of any portfolio. Through good times and bad times, Coke pumps out profits and generates wealth for its owners. It’s an easy business to understand: sugar water. It is a fantastic business. There is nothing quite like it. The returns generated by the selling of sugar water is incredible – consistent return on equity in the 20% range, which means loosely that for every dollar of sugar water Coke sells, they are able to generate 20ish cents of pure profit. But I’m not here to give you an in-depth analysis of Coca Cola today. Instead, I wanted to expand on how using the earnings yield can help you think about opportunity costs. Remember that post on how to think about an asset? Quickly peruse that again as it will be a useful primer for what I am about to go over.

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