I haven’t talked about the stock portfolio I self-direct inside my IRA for a while. Here’s what I’m holding these days:
Chemed, formerly Roto-Rooter (NYSE: CHE). This stock is not very well respected because Roto-Rooter’s core business has not been all that great. However, they have done an excellent job investing their spare cash, and have recently acquired a hospice company that is rock-solid and looks to contribute a lot more to the bottom line than Roto-Rooter in the years to come. I think this is a sleeper waiting to be discovered.
Buffalo Wild Wings (Nasdaq: BWLD). I went to eat at the Bartlett location with my friend Kenny and Rick last year. It was a Tuesday night about 5:45, and the place was packed to the gills. No kidding. The only open seats were at the back bar. All types of people there – families, frat guys, people stopping by after work. And not only were they eating the wings, they were also drinking – and that’s where the real profit is, at the bar. This stock has stayed flat since I bought it due to concerns over the price of wings, but I think the market is failing to consider alcohol and other menu items. I subscribe to the Motley Fool’s Hidden Gems newsletter, which picks undiscovered stocks, and this has twice been picked as the gem of the month.
Microsoft (Nasdaq: MSFT). The S&P 500 is trading at a P/E of 22 as of yesterday. According to the Motley Fool, MSFT is trading at a P/E of 21. I cannot believe that one of the finest companies in the world is trading at a discount to the market as a whole. Investors seem to have ignored everything this company has done since about 1998 – including releasing Windows 2000 and XP, which were monumental improvements over their predecessors. MSFT has also increased their dividend and announced a special one-time dividend of $3/share for later this year to pay out some of the cash it has been hoarding. The company has settled most of its legal challenges. I think the fair value of this stock is at least 50% above where it sits now.
Alderwoods (Nasdaq: AWGI). My newest addition, bought just this morning. Another two-time Hidden Gem recommendation. Alderwoods runs a chain of funeral homes. They went bankrupt in 1999, but have since fired their management and hired a CEO who has 25 years’ experience turning companies around. They’re paying down debt, and the CEO’s incentives are tied to further debt reduction. Management shows integrity in an industry not known for it. Death rate will begin to increase as baby boomers approach their 60s. Stock had gone up to 13-14, then they had an earnings miss and it fell back down. I was happy to scoop some up for 9.30 a share. The Fool thinks it will triple over the next five years, and I agree.
So far this hasn’t been a great year for my stocks – I’m about even after being up over 100% last year. I’m going to start watching it a little more closely. When you self-direct an IRA in stocks, you have to stay on top of everything with the companies you own, and those on your watch list.
That’s all for now – have a good weekend everybody.