March 15, 2013 at 1:58 PM ET
In elementary schools across the U.S., there is no better stock picker than 11-year-old Rachel Kelly, according to the educational nonprofit SIFMA Foundation, which runs a national stock-picking contest.
Kelly was told for the first time that she was a national winner live Friday on CNBC's "Squawk on the Street."
Every year since 1977, SIFMA has conducted a nationwide competition called the "Stock Market Game," where U.S. students compete to generate the highest returns in a hypothetical $100,000 portfolio. In 2012, it is estimated that 600,000 students from 4th through 12th grades participated.
At the end of the game, students are encouraged to enter into the supplementary "InvestWrite Challenge," an essay competition. For InvestWrite, students choose the publicly traded company that they deem to be the best long-term investment and explain why.
Rachel's essay was selected from a pool of 20,000 applicants as the best in her group, as decided by a panel of teachers and professional investors.
Kelly's pick: Japanese-based Honda Motor. She was inspired to do so after finding out that her family's Acura was produced by a subsidiary of the firm. After learning this, she explained, "I wanted to choose a company that was well known. I thought about products that I see every day — and cars came to my mind. Honda is a good investment. The stock price has risen over the past 25 years and it is a diversified company."
Arguing in her essay that Honda's diversification makes the company a "safer investment," Kelly also noted that the company is well positioned for rising gas prices and has a culture of innovation, including its work in the robotics space.
In the competition, students analyze economic events and trends, conduct research, and develop investment recommendations, a process SIFMA hopes will increase and encourage financial literacy.
"InvestWrite and the Stock Market Game program require students like Rachel to monitor daily global market activity, business trends, and economic factors that drive investments to determine the growth potential of industries, companies, asset classes, and specific stocks, bonds, and mutual funds," said Melanie Mortimer, executive director of the SIFMA Foundation. "They are asked to make sophisticated, thoughtful recommendations that reflect what is expected of college and career-ready students."
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