BUSINESS

Motley Fool for Nov. 28

Staff Writer
St. Augustine Record

Ask the Fool

Ticker Talk

Q: What do I need to know about stock ticker symbols? -- W.H., Niles, Indiana

A: A ticker symbol is a short identifier for a company's stock. Most major American companies' stocks trade on the Big Board -- the New York Stock Exchange (NYSE) -- or on the newer Nasdaq Stock Market. It used to be that NYSE stocks generally had three or fewer letters -- such as T for AT&T, GE for General Electric or MMM for 3M. Nasdaq stocks typically had four letters, such as JBLU for JetBlue Airways or INTC for Intel. Nasdaq stocks might sometimes have a fifth letter tacked on to reflect something about the company, such as an F indicating that it's a foreign company, or a Q indicating that it's in bankruptcy proceedings.

Times have changed, though, and now NYSE stocks sometimes sport four letters -- LNKD for LinkedIn and KORS for Michael Kors -- while some Nasdaq stocks have fewer than four -- MAT for Mattel and FB for Facebook.

To find a company's ticker symbol online, click over to sites such as Fool.com and type the company name in the search box. Newspaper stock listings also usually include ticker symbols.

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Q: Do I have to work for a company in order to buy its stock? -- L.L., Mesa, Arizona

A: It can help, because some companies do let employees buy stock at a discount, and some offer stock options or stock grants, too. But anyone can buy into publicly traded stocks, and all you generally need is a brokerage account. Almost every major company you can think of, and many smaller ones, are publicly traded. Read up and learn more before investing heavily in individual stocks.

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Fool's School

Keeping Up With Your Holdings

If you buy into an inexpensive broad-market index fund, such as one based on the S&P 500, you can leave it alone to grow for decades. But if you want to aim for returns higher than the S&P 500's by investing in some carefully selected individual stocks, you will need to follow them and keep up with their progress.

It's best to check in on your holdings at least once per quarter, though if they're slower-moving, established giants such as Wal-Mart or Kroger, you can get away with less often. Since most of us have limited time, having to pay attention to each of your holdings means you shouldn't own stock in too many companies. A reasonable range for most of us is about eight to 15 high-quality companies. Hold many more, and you'll likely miss important developments with some. Hold too few, and your eggs will be in fewer baskets, making your portfolio riskier.

Start your reviews with your companies' quarterly reports. Most publicly traded American businesses issue an annual report along with a more detailed 10-K report once a year. In the intervening quarters, they issue abbreviated (but still informative) 10-Q reports. Each of these features important financial statements that track sales, profits, debt loads, inventory levels and more.

Many companies hold quarterly conference calls between management and Wall Street analysts -- often including links to recordings of them on their websites. A quick online search might even turn up transcripts. You can check out what people are saying about the company in online discussion boards, too, such as those at boards.fool.com.

As you review your holdings, ask yourself: Is this company still on track? What progress is it making, and what obstacles is it encountering? Is it going in any new directions? Are there any red flags or troubling trends in the financial statements' numbers? What should I look for in future reports? Do I still believe in the company's future? Should I hold on?

The more you know, the better you can do.

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My Dumbest Investment

A True Enigma

My dumbest investment has been in Capstone Turbine, a company that specializes in micro-turbines. I have hung on for 10 years, hoping it will improve and be profitable. I have sold and bought back in on major news and momentum only to be disappointed numerous times. This company is a true enigma! How long can it stay in business? -- D.B., Camarillo, California

The Fool responds: There are reasons one might be hopeful about the company, as its turbines can be used in a variety of promising ways, such as for hybrid electric vehicles, and it has a backlog of orders. But there are many red flags. For starters, a decade ago and even now, it's a penny stock, with its stock trading for well under $5 per share. Over the past 10 years, it has posted net losses instead of net profits and negative free cash flow. Revenue has grown over that period, but it has been shrinking lately.

How is the company staying in business? Well, one way is by selling new shares. That may sound innocuous, but the more shares there are, the smaller the claim each one has on the business. That's dilution, which destroys value for shareholders. Capstone has potential and may succeed in the long run, but it's a struggling business and investing in it would be risky. Don't hang on to companies in which you have little confidence.

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Foolish Trivia

Name That Company

I trace my roots back to 1886, when coffee with my name on it was prepared for a luxury hotel in Monterey, California. A few years later, canned peaches were branded with my name, too. My popular stewed tomatoes debuted in 1955. In 1973, I became the first major food processor in the United States to include nutrition labels on my products. Today, based in Florida and with a market value topping $2 billion, I'm a top global producer, marketer and distributor of fresh fruits and vegetables. I also produce and distribute prepared foods outside the U.S. Who am I?

Last Week's Trivia Answer

I trace my roots (and my name) back to a Chicago piano company founded in 1857. It was once one of the world's biggest manufacturing operations, with a train line running through it, and was the world's largest piano company as well. The Jasper Corp., which made electronics for organs, bought the piano company in 1959, and later branched out into furniture. Today, based in Jasper, Indiana, I'm a maker of office and hospitality furnishings, such as desks, cubicle systems, dressers, fabric wall panels, chairs and vanities. I spun off my electronics division in 2014. Who am I? (Answer: Kimball International)

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The Motley Fool Take

On the Rails

The Union Pacific (NYSE: UNP) railroad company runs between 23 states in the western two-thirds of the U.S. Its share price has dropped over the past year, boosting its dividend yield to a recent 2.5 percent and making it a more appealing portfolio prospect.

Why the slump? Well, along with an overall market weakness, prices for commodities have been weak, too, with oil prices plunging and demand for coal slowing. These factors can change over time, though, and until then, Union Pacific is good at keeping its costs under control, having grown its earnings per share consistently over the past five years. It has been successfully raising prices, too, and its own operations have profited from low fuel costs.

The long-term promise for railroads is strong, as, perhaps surprisingly, it's far more economical to transport freight by train than by truck. Also, demand for energy products and agriculture should naturally improve over time as the U.S. population grows, and these are core products that Union Pacific transports. It's simple math that works in investors' favor and should help improve Union Pacific's pricing power.

Meanwhile, the company has been investing in future growth by plowing more than $31 billion into its network and operations between 2005 and 2014. With free cash flow topping $3 billion annually and net profit margins recently topping 20 percent, Union Pacific is a strong performer.