Beat and Raise

“Beat and raise.” Those are the two best words a shareholder can hear out of an earnings report.  That is exactly what Square (SQ) did this week. They beat analyst’s estimates and raised guidance for 2018. For some reason, the stock fell a bit after the report, but once investors heard the conference call, SQ rose another 1.5% to another 52-week high near the $38 mark.

The “payment space,” as Wall Street would call it, is hot.  Paypal (PYPL), Visa (V), and MasterCard (MA) are leaders in the industry, but Square is gaining market share, and working on their banking side, making loans to small businesses and building a customer base that will either make the company a strong independent processor or make it an attractive take-out candidate.  Either way, investors (like me) win.  So far, it’s been a nice ride.

Meanwhile, Pfizer (PFE) struggles along as almost dead money, and while it’s a nice dividend play, at 3.6%, young-at-heart investors (like me) would like to see some growth in addition to the attractive dividend.  I like to refer to “growth and income” as my favorite phrase, and the “income” part speaks to the “growth” part when it comes time to sell - which appears to be closer with Pfizer.  My legendary patience is wearing thin.  Are we a drug stock, an income stock, or a growth company?  My guess is the first two, and that does not feed my desire to speed-up my retirement date.  A 3.6% dividend is nice, but if the share price doesn’t move (which it hasn’t much) then the dividend isn’t as attractive as it would be if the company grew and increased the dividend.  That’s how it is supposed to work.  A dividend yield isn’t supposed to increase due to a share price decrease.  Get it? I do.  It’s time to sell Pfizer.

But what to do with the cash?  Buy more Square? One of my favorites, Del Taco (TACO) is moving toward it’s 52-week low of $11-and-change. Cisco Systems (CSCO) reports in a week. That’s a possibility.  So many choices.

I’ll keep you in the loop.