The Boeing Company (NYSE:BA)
In contrast, Boeing’s announcement that it’s hitting the restart button on a $3.6 billion share repurchase program (and upping its dividend to boot) would ordinarily merit praise. Unlike AmCap, Boeing’s been consistently profitable over the past decade, raking in about $2.3 billion annually — and making nearly twice that over the past 12 months, en route to the company’s most profitable year ever.
Priced at only 13 times earnings, growing at 12%, and paying a 2.6% dividend, Boeing shares look like a value investor’s dream. But here’s the problem: Vastly profitable, Boeing is currently engaged in contentious contract negotiations with its SPEEA engineers’ union, pleading poverty and demanding concessions from the union. Announcing a share buyback in such a context seems a slap in the face to the SPEEA, and has been hurting the company’s chances of avoiding a labor strike. Considering that Boeing must have these engineers on the job to fix much-publicized problems with its Dreamliner aircraft, this buyback seems ill-considered, and particularly ill-timed.
Smith & Wesson Holding Corporation (NASDAQ:SWHC)
Now, I don’t like to end this column on a down note, and fortunately, this week I don’t have to. On one hand, you might think gun maker Smith & Wesson has even bigger problems than Boeing, what with the entire U.S. government (seemingly) now gunning for new strictures on weapons sales.
On the other hand… you’d be wrong. Historically, threats of legislation haven’t really hurt the gun industry financially. And having been around the block a few times already (the company was established in 1852), Smith & Wesson knows an opportunity when it sees one.
Last month, S&W announced it is buying back up to $35 million worth of its shares. The company generates nearly that much cash in an ordinary year. And considering that S&W sells for just 11 times earnings, is growing earnings at 30%, and has no net debt, I think the shares offer great value — for Smith & Wesson, and for the rest of us.
The article 2 Stocks That Are Wasting Your Money originally appeared on Fool.com.
Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool recommends Berkshire Hathaway. The Motley Fool owns shares of Berkshire Hathaway.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.