Ready to Get Your Kids Into Investing? Consider These 3 Stocks.

There are plenty of opportunities to teach your kids about investing as you build on Peter Lynch's reminder that owning a stock is not like buying a lottery ticket; it's part-ownership of a business. One way to get your kids thinking like investors is by using the companies that make or provide the toys, clothes, and snacks they love as well as household goods they use every day. Read on for three Fools' picks for good stocks for kids. 

Jeremy Bowman: For the sports-loving kid, I think Under Armour's  a great choice. The stock has performed incredibly since the recession, up nearly 1,000% in the last five years, and its consistent history of new products and innovation should ensure future growth and outperformance.

The company has put itself at the forefront of sports technology with innovations such as the E39 sensor-equipped compression shirt that measures heart rate, metabolism, and lung capacity, and originally made a splash in the apparel industry with its trademark compression tee, which has become a favorite of professional athletes. The brand is also overwhelmingly popular among kids and millennials -- just ask one -- and Macy's began stocking it last year in an attempt to lure younger shoppers into its doors. 


Under Armour is a company that is relevant to kids and easily relatable, as it's a brand they probably encounter every day at school. Finally, Under Armour's underdog battle against Nike should be exciting to watch over the coming years, and it's still torrid revenue growth rate (30%) should ensure the stock remains a winner. This is one stock that will pay off for your kids, and be fun to follow. 

Steve Symington: There's plenty of opportunity for parents to teach their children about the products we consume. But we also shouldn't forget the retailers that sell those products. I don't know about you, but my kids thoroughly enjoy our frequent trips to Costco Wholesale  for everything from the samples, treasure hunt-style atmosphere, and -- if we're lucky -- getting to watch a forklift impressively raise large pallets of bulk goods.

First, Costco pays a nice little dividend with a current annual yield around 1.2%, which presents a perfect opportunity to teach children about the power of compounding through reinvesting those payouts. As my kiddos learn how retailers make money -- namely by marking up products they've purchased from suppliers -- I'll also be able to use Costco to illustrate the advantages of its membership-based, discount retail model, which focuses on selling huge quantities of a relatively small number of products as compared to traditional brick-and-mortar brands.

What's more, you'd be hard-pressed to find a retailer as unaffected by the steady rise of e-commerce as Costco. Online sales only represented 3% of Costco's total net sales last year, but last quarter it still enjoyed a 9% jump in total net revenue on 6% comparable-store sales growth. That was capped by 10% and 7% growth in August revenue and comps, respectively, representing Costco's best result since December 2012. Couple that with consistent membership renewal rates north of 90%, and it's evident Costco is an enduring name your kids will be able to enjoy for decades to come.

Ashraf Eassa: One stock that looks interesting for kids is LeapFrog , a company that bills itself as creating "educational solutions that delight, engage and inspire children to reach their potential." The stock has gotten crushed following a pretty disastrous earnings report last quarter. Sales fell 47% year-over-year in the U.S., with international sales plunging to the tune of 34%. The stock is down 23% year-to-date.

According to the company's earnings press release, the weakness this year has been due to "retail inventory carry-forward from Holiday 2013" as well as "tough conditions in most of [its] key markets."

In fact, CEO John Barbour pointed out that the inventory is taking longer-than-expected due to the fact that LeapFrog's products aren't as deeply discounted as other children's products are. Further, Barbour noted that despite discounts, LeapFrog's products are still priced "significantly higher than the average consumer prices for children's products sold during spring and summer," further adding to the difficulty of clearing out this excess inventory.

Well, that's the bad news.

The good news is that Barbour noted on the company's most recent call that he expects the second half of fiscal 2015 (December and March quarters) to be "much brighter," citing double-digit sales growth during those quarters for the company. Driving this expected business uptick will be new products such as new tablets, new games, and "two new exciting new product lines in new high-growth categories not currently being addressed for younger children" according to Barbour.

I like the risk-reward here, and for investors able to stomach the volatility (alternatively, the excitement) of a small-cap tech stock, LeapFrog is worth a look.

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The article Ready to Get Your Kids Into Investing? Consider These 3 Stocks. originally appeared on Fool.com.

Ashraf Eassa has no position in any stocks mentioned. Jeremy Bowman owns shares of LeapFrog Enterprises and Nike. Steve Symington owns shares of Under Armour. The Motley Fool recommends Costco Wholesale, LeapFrog Enterprises, Nike, and Under Armour. The Motley Fool owns shares of Costco Wholesale, LeapFrog Enterprises, Nike, and Under Armour. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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