Question:
How do you rate GE stock these days? It seems to have stayed at the same level for a few years now. Is it a good long term buy?
Answer:
We believe General Electric Company (NYSE: GE) is a good long-term buy, but the market has not responded to the company’s increase in earnings like we thought it would. We think GE has its act together. The company has shrunk GE Capital from $600 billion to $400 billion and their commercial paper is around $39 billion vs. the $100 billion it was. The company has deleveraged, which we think is a good move. The financial arm of GE will be looked at as if it were a bank, which can be very restrictive.
We believe the company will grow in line with the general economy, perhaps a little faster. The company pays a 3% dividend, which makes GE more of a dividend play than a growth story. GE’s performance is influenced by the Industrial, Financial and Healthcare sectors. The diversity gives the company stability of earnings, which may mean slower growth. It is very rare for all sectors of a market to go up at once. GE has also experienced good results from its emerging market exposure. We are in no hurry to sell GE. We deem this company a hold.
Question:
I’ve been looking at SABMiller for the past few months. It’s a huge company, the brands aren’t going anywhere, but it is only available on the OTC markets. Does that give you reason to pause before buying a stock?
Answer:
Generally smaller companies trade on the over-the-counter markets. SABMiller plc (ADR) (OTCMarkets: SBMRY) is an international company that manufactures, distributes and sells beverages. The company is a bottler of international Coca-Cola products, but it is primarily a beer company with brands like Peroni, Pilsner Urquell, Grolsch, Coors and Miller Genuine Draft. The company is avoiding fees by choosing not to trade on the U.S. markets. However, this lowers the liquidity in the stock’s shares. Additionally, it receives very light coverage from stock analysts. The lack of analyst information and its low liquidity make SABMiller an unattractive investment.
Question:
I’d like to know if Tower International is a sell. I’ve nearly doubled my money this year. If I were to sell, what would you recommend?
Answer:
We recommend selling your position in Tower International, Inc. (NYSE: TOWR). We feel that the company is speculative. The company has a $430 million market cap, and is a global manufacturer for structural metal automotive components. If you want an Industrial sector holding, we recommend Cummins, Inc. (NYSE: CMI). The company designs, manufactures, distributes and services diesel engines. The company is also heavily investing in natural gas engines. The stock is a little volatile as the company has significant exposure to the European markets; however, we believe it is in a sweet spot in terms of having a cutting edge product with its natural gas engines.
Question:
I was reading an article on some mutual fund picks, and I came across The Delafield Fund (DEFIX). It’s got some amazing performance, but the ratings are just so-so. I wanted to get your opinion on this fund. Thanks.
Answer:
The Delafield Fund (DEFIX) is a Mid-Cap value fund with what we think is merely OK performance. It is rated three stars by Morningstar. The fund has 40% of its assets in the Industrial sector. We believe a portfolio should have no more than 25% in one sector. Furthermore, the fund seeks to buy cheap stocks from failed acquisitions, misguided strategies and management upheaval, which typically lack the financial quality we look for. Therefore we do not recommend this fund for those reasons. If you are looking for a Mid-Cap fund, we recommend looking at Astor/Fairpointe MidCap (CHTTX), Vanguard Mid-Cap Index Funds (VIMSX) or the Ivy Mid-Cap Growth Fund. (WMGYX).
At Henssler Financial, we believe you should Live Ready, and that includes evaluating your holdings. If you have questions on your investments, the experts at Henssler are here to help. Contact us at 770-429-9166 or 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.
