Thursday, April 4, 2013

Ramp up your “Fun” Quotient

I’ve always loved stocks that bring out the kid in me, and when I fired up my search engines this morning, I lucked out! I’ve found three excellent companies with growing earnings, nice dividends, and appealing technical indicators—all in the entertainment industry. It’s a category that just loves summer, when families flock to leisure activities. And with the economy improving, all indicators are that this sector will have a bonanza season.

And adding an extra dollop to these companies appeal—for me—is the fact that they are midcap stocks—one of my favorite hunting grounds.

I love the small- and mid-cap universe, as they are usually companies who specialize in a few products or services. That area of investing offers several advantages for investors, including:

·       It makes their financial statements more visible, so that you can easily see early warning signs of impending trouble. No need to wade through scores of subsidiaries, trying to figure out how their fortunes affect the consolidated company, or if they are the next “Enron” in training.
·       These are the sorts of companies whose expertise in their industry or niche is very often attractive to larger businesses that would rather buy them than try to copy and compete with them. And that usually means a nice premium for their shareholders. 

·       They are often “undiscovered stocks”—not because they are speculative, but because they aren’t large enough yet to need Wall Street’s money, so they aren’t on the buy list at the majority of brokerage houses. That means you can buy them at discounted prices, and when they do begin attracting the attention of the analysts and institutions, their stocks can soar.