Can Buffalo Wild Wings Add Some Spice to your Portfolio?

Tuesday, September 27th, 2016

The 529 Plan is a college savings plan that is often tossed around as a great option when it comes to saving for college.

There are two options for the 529 plan; the first is the prepaid option, where you can lock in the current tuition prices.

This sounds nice in principle, but there are some major concerns. What if your child does not want to attend a school that you prepaid for?

The second 529 plan is a savings plan, where you can contribute money and invest it so it grows, until you need to begin taking withdrawals for the child's school payments.

The first problem that arises here is the investment selection can be limited, which may make it difficult to make good financial investments.

Another problem is, what if your kid does not want to go to college? There are many different positions today that pay well and do not require a college degree.

If your child does not attend college you have a couple of options: You can roll the 529 plan to another beneficiary such as a niece or a nephew, or you can cash the 529 plan out.

Rolling the plan to another beneficiary avoids penalty, but it is hard to part ways with money you had initially intended for your child.

Cashing the 529 plan may result on a 10% penalty as well as income tax on the investment gains.

By choosing to invest in a 529 plan, you are limiting yourself to a limited number of options. It would be much easier to invest through a basic TOD account, and having it grow tax favored and then using those funds to pay for your kid's college with those proceeds.

Today's company of the day is Buffalo Wild Wings (BWLD).

The current price is $156.04 and the 52-week range is $122.25-$205.83.

Sales have climbed 17.9% over the last 12 months and EPS has risen 9.5%. Management effectiveness appears to be strong, as return on capital of 13.32 is above our target of 10.0 and return on equity of 16.23 is above our target of 15.0.

The current ratio of 0.53 is cause for concern, as it could create some liquidity problems down the road.

Even with a poor current ratio, the balance sheet appears to have some strength as debt/equity is only 23.1%. This falls well below the industry average of 318.1%.

Looking forward to December 2017, estimated EPS of $6.91 gives us a target sell price of $114.02.

Although we enjoy the restaurant, the stock appears to be overpriced.

Do you have a question or a company you'd like me to take a look at? Email us at Brent@WilseyAssetManagement.com or Chase@WilseyAssetManagement.com!


Brent Wilsey is president of Wilsey Asset Management and can be heard every Saturday at 8 a.m. on KFMB AM760. 

Chase is a financial analyst for Wilsey Asset Management and can be heard every Saturday at 8 a.m. on KFMB AM760 as the co-host for the Smart Investing show with his father Brent Wilsey. Information is provided by Reuters.

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