InvestWrite Champ: Ann Taylor Beats Abercrombie
Editor's note: InvestWrite is a national writing competition, produced by The Stock Market Game program.
Meet the Top Three InvestWrite Student Essayists |
var config = new Array(); config<BRACKET>"videoId"</BRACKET> = 1577955656; config<BRACKET>"playerTag"</BRACKET> = "TSCM Embedded Video Player"; config<BRACKET>"autoStart"</BRACKET> = false; config<BRACKET>"preloadBackColor"</BRACKET> = "#FFFFFF"; config<BRACKET>"useOverlayMenu"</BRACKET> = "false"; config<BRACKET>"width"</BRACKET> = 265; config<BRACKET>"height"</BRACKET> = 255; config<BRACKET>"playerId"</BRACKET> = 1243645856; createExperience(config, 8); |
InvestWrite, Fall 2007-Spring 2008: Grand Championship Essay, Elementary School
Student Instructions: Research the clothing industry and pick two popular companies that are listed on the stock market. Describe what they sell and how much they earn. Explain which of the two companies you think is a better investment.
"To Buy or Not to Buy...that is the Question!" by Caroline Hersh
5th Grade
Thomas Elementary School
Morristown, New Jersey
In 1792, or 215 years ago, 24 brokers and merchants gathered in New York City to sign the Buttonwood Agreement. This led the way for investors to trade securities in the
New York Stock Exchange
. Today, millions of investors continue to search for higher trending stocks like
Apple
(AAPL) - Get Report
. The stock market is separated or classified into smaller groups called sectors. Along with the financial, health care, and technology industries, there is also an apparel sector. Deciding which equity in the apparel sector that will outperform its competitors is difficult but not impossible to determine. By using
technical analysis charts, monitoring the behaviors of executives in the company, and researching
analyst expectations,
Ann Taylor
(ANN)
is clearly a much more profitable investment compared to
Abercrombie and Fitch
(ANF) - Get Report
.
Although technical analysis cannot replace a fortune teller's crystal ball, it remains a helpful tool to investors. By closely examining technical analysis charts, investors can project future share price trading patterns. Ann Taylor's technical analysis charts currently represent a bullish trading signal. By using the 50, 100, and 200 day
moving averages, Ann Taylor's current price is above each of those averages. This often represents a strong buy alert.
Conversely, Abercrombie and Fitch's current price recently crashed and burned below the 50, 100, and 200 day moving averages. This represents a strong and convincing bearish trend. Also, Abercrombie and Fitch recently double topped the 80 percent line on the fast stochastic chart indicating that the stock is significantly
overbought and due for a sell-off. On the other hand, Ann Taylor's percentage of K recently hit the 20 percent line twice indicating that the stock is significantly oversold. Based on this data Ann Taylor is obviously a wonderful stock to invest.
Monitoring the trading behaviors of executives is very useful because if the insiders of the company are selling their shares, the general assumption is that the executives have lost short term confidence in their company. This is definitely the case for Abercrombie and Fitch. Recently, the top executives in this company sold more than 50% of their individual shares. This may cause analysts to start questioning revenue forecasts and investors to dump their shares. Traditionally, individual investors are less likely to buy a stock that has encountered such high levels of insider selling. Conversely, insiders at Ann Taylor bought 11% more shares of their own company. This usually trickles down to individual investors who buy based on executive enthusiasm and confidence.
Tracking analyst's opinions can help investors to make profitable investments. "This holiday season
2007 is going to be Grinch-Like," said Carl Steidtmann, chief economist at Deloitte Research. According to several analysts, retailers are preparing for the worst holiday season yet, but not for Ann Taylor. Analyst Jaime Sheinheit says, "There is a lot of opportunity for Ann Taylor to improve margins this holiday season." Since Ann Taylor continues to develop new products at lower prices, the company continues to benefit, financially. "As always, it comes down to having the right product," said Sheinheit. Eleven other analysts have also rated Ann Taylor a "buy" or "strong buy."
Based on current pricing charts, insider selling, and analyst opinions, Ann Taylor is a much better investment. By studying technical analysis charts, Ann Taylor continues to support a bullish trading pattern. Furthermore, monitoring the actions of executives offers valuable information about the overall company. Abercrombie and Fitch's executives certainly are not optimistic about their immediate future judging by the fact that they sold more than half of their shares in their own company.
Lastly, analysts predict that Ann Taylor has a big opportunity to improve margins this holiday season leading to higher profits. No one can predict with a hundred percent accuracy the future performance of an individual stock, but Ann Taylor is poised to hit a homerun in the apparel sector over the next few months.
Don't miss the championship middle school and high school essays.To learn more about The Stock Market Game, go to www.stockmarketgame.org.









