Question:
In 2000, my mom’s broker put her in what I thought were bad investments—including First Cash Financial Services. It was selling for $0.77 a share. Fast forward to 2013, and I’m in the process of settling her estate…and I was floored to learn that it is trading at $53 a share.
I’m splitting the inheritance with my sister. What should we do with it? Sell it? Keep some? What is our basis in the stock? We’re looking at about 450 shares between us.
Answer:
If the stock is part of your mother’s probate estate, your cost basis is what the stock was selling for at her death. So in this case, this benefits you greatly. If you sell, you have no capital gains. As for the stock itself, if you had asked us in 2000, we would have recommended avoiding it at all costs. Considering what it has done, we believe you caught lightning in a bottle. First Cash Financial Services, Inc. (NASDAQ: FCFS) operates more than 700 pawn shops in the United States. The company appears well-managed, but we wonder how pawn shops fit into an economic expansion. The company seems like it has good growth potential, so you should be OK if you held a few shares. However, since your cost basis is so low, we suggest selling the shares and taking your windfall.
Question:
I was looking at a couple of my mutual funds in my 401(k), and I noticed that several had Estee Lauder as a holding. Is this a stock worth considering for my brokerage portfolio?
Answer:
We do not recommend that you buy Estee Lauder Companies, Inc. (NYSE: EL), as you already own it in your 401(k). By adding it to your brokerage portfolio, you risk being overexposed to one stock.
For those who do not own Estee Lauder, we find it to be a very high quality company with high quality products. The stock pays a 1.2% dividend. The stock can get a bit ahead of itself, but it is something worth holding and worth buying at a good price. We suggest looking for a price to earnings ratio below 20. The company has optimal debt at 30%, and it is looking to expand abroad and into emerging markets.
Question:
I own Core-Mark. I think you’ve recommended Sysco. Should I sell Core-Mark and buy Sysco? I’m trying to grow my portfolio. My thought was I could reinvest the dividends, and Sysco pays a higher dividend. However, Core-Mark is a smaller company, and has room to grow. What is your advice?
Answer:
Core-Mark Holding Company (NASDAQ: CORE) is a distributor to convenience stores. Sysco Corporation (NYSE: SYY) is a distributor of food and related products to restaurants. Arguably, the restaurant industry could provide better growth for Sysco, as the industry is fragmented, and Sysco could gain market share. Sysco also pays a healthy 3.4% dividend. If income is a concern, we believe Sysco could be the better pick. Sysco is a higher quality stock, and from a value perspective, a better holding. Core-Mark might favor a younger investor, as it may grow faster while paying a 1.2% dividend.
Question:
I have shares of CBS Corp from an employee stock purchase plan. I no longer work for the company, so I’m not holding on to it for any particular reason. It’s done alright in the last year, but what about going forward? I’d like to get out before it falls.
Answer:
We recommend selling CBS Corporation (NYSE: CBS). We believe investors are in a better position owning Comcast Communications (NASDAQ: CMCSA) or The Walt Disney Company (NYSE: DIS). They are diversified content providers. In the end, content is king. Considering the iPods, smart phones and tablets available, people are downloading and paying for content. Disney has a content line we prefer.
At Henssler Financial we believe you should Live Ready, which includes understanding the fundamentals of your investments. If you have questions regarding your stock holdings, the experts at Henssler Financial will be glad to help. You may call us at 770-429-9166 or email at experts@henssler.com.
Disclosures
This article is meant to provide valuable background information on particular investments, NOT a recommendation to buy. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.
