24/7 Wall St.

Christmas is almost here, and hopefully most parents have finished their holiday shopping for the kids. 24/7 Wall St. wanted to take the lesson of investing to youngsters, via their parents’ pocketbooks and efforts, of course. Getting physical delivery of shares of stocks is no longer that common, but a trading statement for shares of stocks can perhaps be a great stocking stuffer for your kids.

Obviously this is far from cheap, because it can cost close to a small fortune to buy even one share of some great companies. Using the Peter Lynch investment model of buying companies with products you know and use may be the easiest way to teach youngsters about saving and investing for the next generation.

Of course, considering a company as an investment requires fundamental analysis. Parents can teach their kids about judging a company’s future prospects rather than just looking into the past successes. Kids also can end up in a crash course on how to evaluate companies in this manner.

24/7 Wall St. considered many companies for this exercise, and the list of stocks recommended for kids at the end of 2013 may be entirely different at the end of 2014. Some of the great companies are simply too expensive in share price or in valuation to make sense for young, would-be investors. Market conditions and valuations can change drastically, but the focus of sticking with known products and companies is a lesson that should never go away.

There are many lessons to learn here, and we singled out what we considered would be a great lesson in each investment. Perhaps the greatest lesson that can be taught at an early age is that not all investments make money. Sometimes the timing is just as important as the fundamentals of a company.

Apple Inc. (NASDAQ: AAPL) still has the love of the youngsters. They just do not flock to Windows now, although the cheaper anti-Windows consumer product may be Android. Apple now trades at less than $550, after having hit just over $700 at its absolute peak. This is a case where the stock looks cheap on the surface, at only about 13 times forward earnings, but it also is a good lesson for the youngsters. Outside of having to save and save and only be able to buy one or two shares, the lesson here is that a company has to keep innovating. If not, well you have already seen what can happen when a major growth story turns into a value stock after becoming the largest company by market cap.

Five Below Inc. (NASDAQ: FIVE) is a store based on the modern-day dollar store theme but targeted on the younger crowd. Being frugal and sensible with products in the $1 to $5 range may be a good lesson for living within the means of an allowance. Could this help teach kids to live within their means when they grow up? Another good lesson here is the “regional to national” story. The company has fewer than 300 stores, and many cities still do not even have a Five Below store yet. Its shares are trading around $43, and the consensus analyst price target is above $49. The stock did incredibly well after its 2012 initial public offering, and it peaked at about $55 before coming back down to earth. Five Below wants to grow its footprint by another 50% or so in the next couple of years, but at 43 times future earnings it also offers a lesson that you sometimes have to pay up handily for growth.

Hasbro Inc. (NASDAQ: HAS) versus Mattel Inc. (NASDAQ: MAT) may be a good lesson in value investing analysis for your kids. Toy trends come and go, and chances are extremely high that your kids have at least one or two products from each company in their bedrooms or closets. Both companies are generally valued similar to each other, so simply using expectations of future P/E ratios could be a good lesson for teaching youngsters about picking cheap stocks. Hasbro trades at about 16 times next year’s earnings and Mattel trades at about 15 times forward earnings. Hasbro has handily outperformed Mattel in 2013 with gains of almost 50%. Maybe taking the value approach and picking the laggard will be a good prospect for 2014. If not, it will serve as a good lesson that sometimes a cheaper stock is cheap for a reason.

Lions Gate Entertainment Corp. (NYSE: LGF) has become the next big movie franchise powerhouse. Where “Twilight” dropped off, “The Hunger Games” picked up the slack. Every teen in America seems to have enjoyed both series, and the company has another year or two to come up with its next hit series to enthrall adults and youngsters alike. Shares were recently back under $30, after having peaked at almost $38.00 during the Hunger-hype. Analysts have a consensus price target of more than $39, and the highest price target is up at $45. Lions Gate cannot rest on its past success at all. The lesson for the kiddos here is simple: in investing you have consider the future as well as the past.

Nike Inc. (NYSE: NKE) definitely fits in with the Peter Lynch model of buying what you know. Every kid (and adult) in the world knows what that swoosh sign means. The company makes great sportswear products, and someone thought so much of Nike that it was recently added into the Dow Jones Industrial Average. Your kids can learn that great products often do not come cheap, nor do their stocks, at about 25 times expected earnings in this case. Nike leads in many categories and has only a few serious competitors. A lesson here may be that having great products still requires a company to remain innovative and nimble to thwart any competition from peers and upstarts ahead.

Walt Disney Co. (NYSE: DIS) is another go-to stock for kids that Peter Lynch would say yes to. Whether it is theme parks and travel destinations, toys, ESPN, or action and animation movies, there is something for every kid here (and maybe parents too). Also, how many kids will not become the next generation of Star Wars freaks? Disney’s stock keeps performing well, and it is not exactly cheap at 18 times expected earnings. Sometimes you have to pay up for quality, and Disney’s lesson is that it has become a conglomerate of entertainment assets. Disney just offers a lot of angles for targeting kids, and adults with kids know that Disney will at some point in a kid’s life capture much of their entertainment budget.

Whole Foods Market Inc. (NASDAQ: WFM) has become the healthy food destination of choice for Americans. Its products are far from cheap, but generally you can count on the food choices being healthier for you and your kids, compared to many other grocery stores. Taking your kids to Whole Foods and explaining the benefits of a healthier lifestyle hopefully will have benefits for the next hundred years. The stores also force most budget-minded buyers to make serious choices rather than just aisle shopping and grabbing whatever suits their fancy that day. Another lesson is that this company cannot be analyzed as a traditional grocery chain, because it is almost a luxury brand, with its far higher margins than the major national grocery chains. Whole Foods trades at more than 30 times expected earnings, which is about twice that of the traditional grocery store chains.