The Motley Fool's Weekly Editors' Picks
Fools were out and about this past week in an investing world jam-packed with actions and ideas. Here are three articles you might find useful as you decide how to invest your money.
Foolish Road Test! Driving the Tesla Model S
Fool analyst Rex Moore didn't rev the Tesla (NAS: TSLA) Model S up to its top speed, but he did get enough action during his recent test-drive to report "just an incredible and thrilling straight on burst" of speed. The car was quiet and comfortable and powerful, Rex said. "An awesome car; I'd love to be able to afford one."
But Rex was out and about as a Fool analyst, and he relates his thoughts on Tesla as an investment, advising investors to think about what the company will do in the future. "We're in the extreme early stages here as [CEO Elon] Musk gets things just right for the ramp-up," Rex said. "Bottom line: great cars, risky stock for long-term owners only, but for me Tesla is undervalued considering its vast potential."
Watch the video to tag along with Rex on his test-drive and get all his insight on Tesla as an investment.
3 Extremely Dangerous Dividends
Fool analyst Brian Stoffel was back with more advice for dividend investors attracted to large payouts. Windstream's (NAS: WIN) 10% yield is tempting, but Brian warns investors away, noting that the telecom company is "struggling to keep paying its dividend."
Investors should look at how much free cash flow a company has and compare it with how much it spends on its dividend. "If the payout ratio is 20%, then a company's dividend is pretty safe -- as it has a nice cushion," Brian wrote. "If it is approaching -- or goes over -- 100%, then it's clear that the company is straining to keep making its dividend payment." The relevant figure for Windstream is 91%.
RadioShack (NYS: RSH) provides a straightforward lesson in why investors must do their homework. Type the ticker into Yahoo! Finance and a dividend yield over 20% is listed on the front page of numbers. Brian points out the fly in this scenario: "The company has already announced that after 25 consecutive years of payouts, it is suspending its dividend."
Read the article to discover the third dividend-paying stock Brian deems "extremely dangerous."
The Best Investors Share Their Favorites
Four Fools share some "nuggets" from this year's Value Investing Congress. Bryan Hinmon reported on what David Einhorn had to say about market darling Chipotle Mexican Grill (NYS: CMG) . "Chipotle has had success in the past raising prices to deal with rising protein prices," Bryan wrote. "But Einhorn suspects the company's ability to do so is coming to an end now that Yum! Brands' (NYS: YUM) Taco Bell has made such vast improvements to its menu." He continued: "To be clear, Einhorn noted that Chipotle was a great company. But companies that are priced for perfection need to be perfect -- and Chipotle's guac might be browning."
Michael Olsen keyed in on Einhorn's comments about Cigna (NYS: CI) , which Michael says has an attractive earnings multiple that already reflects Obamacare's effects. In naming Cigna one of his favorite long ideas, Einhorn noted "Cigna's exposure to large-group commercial insurance, relatively limited earnings exposure to fluctuating medical costs and usage, and margins already well below mandated caps," Michael reported.
Read the article for more of what our analysts learned at the Value Investing Congress.
The article The Motley Fool's Weekly Editors' Picks originally appeared on Fool.com.Kris Eddy has no positions in the stocks mentioned above. The Motley Fool owns shares of Chipotle Mexican Grill, RadioShack, and Tesla Motors and is short RadioShack. Motley Fool newsletter services recommend Chipotle Mexican Grill and Tesla Motors . Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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