Simple SPX Put Credit Spread Strategy (Part 1)
Posted by Mark on September 16, 2025 at 06:38 | Last modified: March 10, 2026 14:13Today I am going to discuss a relatively simple S&P 500 (SPX) put credit spread strategy.
The goal here is to enhance my routine with more discipline. I already check the market around the same time every trading day and usually execute something [may or may not be a good thing]. I track my balances and margin requirements daily. I track bond purchases and the greeks (related to this post but something seems different lately that has rendered some of these triggers less important—potentially a separate discussion altogether): theta, delta, gamma, and vega.
As discussed in the third paragraph here, after repeated episodes of catastrophic loss I want to do something different. A simple strategy will suffice until I do more research to develop that next step.
The strategy is as follows:
- When market is down at 3:50 PM ET, sell an AM-settled SPX put spread 45-60 DTE.
- Sell the farthest OTM 25-point put strike that is 10-delta or higher and buy to cover 25 points below.
- Enter GTC order to close the spread at 50% of the initial credit received after factoring in all fees.
- Stop-loss will be 3x initial credit (for a net loss of 2x initial credit or roughly 4x the average winner).
I think the biggest challenge facing the strategy is closing at stop-loss. I would not use a GTC (or OCO) closing order because quirky option quotes happen and I’d hate to get taken out when the market is proceeding with normalcy and no hint of turbulence. One approach I could use is:
- Walk the option chain NTM by 25-point strikes to identify first closing spread for at least 2x opening credit.
- Subtract difference between identified short strike and positional short strike.
- Subtract (2) from current SPX price.
- Set an “equal to or below” price alert on SPX for (3).
- Upon receiving alert, go into the trading platform and monitor the position with live quotes.
- Close spread with limit order should it reach 3x initial credit.
Whether to close with a market or limit order is debatable and some experimentation may be worthwhile. SPX options are generally liquid enough to use market orders with good execution. I still think a limit order leaving ample room for slippage (e.g. $0.10 – $0.25) is preferable especially because of the occasional fluke quote mentioned above. “Experimentation” means limit order close enough times to make for a valid sample size, which could take months or years. Losses don’t typically occur often with this strategy and they generally cluster around periods of heightened market volatility.
I will continue next time.
Categories: Option Trading | Comments (0) | PermalinkACMR Stock Study (3-10-26)
Posted by Mark on September 11, 2025 at 06:46 | Last modified: March 10, 2026 10:39I recently did a stock study on ACM Research Inc. (ACMR, $46.69). The previous study is here.
M* writes:
> ACM Research Inc supplies capital equipment developed for the
> semiconductor industry. The company focuses on developing
> differentiated process solutions that enable effective particle
> removal, uniform material deposition, and reliable process
> control for the fabricators of integrated circuits. Its product
> offerings include wet-cleaning, plating, furnace, PECVD, track,
> and other front-end processing equipment. Additionally, it
> develops, manufactures, and sells a range of packaging equipment
> to wafer assembly and packaging customers. Geographically, the
> company generates maximum revenue from its customers in
> Mainland China, and the rest from other regions.
Since 2018, this small-size company grows sales and EPS at annualized rates of 45.6% and 40.6%, respectively. Lines are mostly up, straight, and parallel except for EPS dips in ’20 and ’25. Five-year EPS R^2 is 0.82 but Value Line (VL) gives an Earnings Predictability score of 60. Shares outstanding increase 25.3% (3.3%/year).
Since 2018, PTPM leads peer averages but trails the industry despite increasing from 9.9% to 15.0% (’25) with a last-5-year mean of 18.2%. ROE leads peer averages and trails the industry while decreasing from 12.20% to 6.2% (’25) with a last-5-year mean of 10.4%. Debt-to-Capital is less than industry averages but greater than peers while ranging from 5.5% in ’21 to 26.2% in ’20 with a last-5-year mean of 12.3%.
Quick Ratio is 2.3 and Interest Coverage 20.4 per M* who assigns “Narrow” [quantitative] Economic Moat and a C grade for Financial Health (per BetterInvesting® website). VL rates the company B for Financial Strength and has Performance and Technical ranks suspended.
With regard to sales growth:
- YF gives YOY ACE 26.9% and 23.1% for ’26 and ’27 (based on 7 analysts).
- Zacks gives YOY ACE 26.0% and 23.7% for ’26 and ’27, respectively (3 analysts).
- CFRA gives ACE 26.9% YOY and 25.0% per year for ’26 and ’25-’27, respectively (7).
- M* gives a 2-year ACE of 21.8%.
I am forecasting well below the short-term range at 12.0% (no long-term estimates available).
With regard to EPS growth:
- MarketWatch projects 24.3% and 23.3% per year for ’25-’27 and ’25-’28, respectively (based on 7 analysts).
- Finviz gives ACE 5-year annualized 32.4% (2 analysts).
- YF gives YOY ACE 11.0% and 27.6% for ’26 and ’27, respectively (3).
- Zacks gives YOY ACE 5.6% and 41.2% for ’26 and ’27, respectively (1).
- VL gives ACE contraction of 15.6% per year from 2024 to 2026 / 2027 (1).
- CFRA gives ACE 30.7% YOY and 29.0% per year for ’26 and ’25-’27, respectively (3).
Analyst estimates are scant with just one long-term available. My 8.0% forecast is well below the range excepting VL [projects contraction]. Initial value is ’25 EPS of $1.37/share (down 11% YOY).
My Forecast High P/E is 32.0. Since 2018, high P/E ranges from 18.2 in ’23 to 83.7 in ’21 (128 in ’20 excluded) with a last-5-year mean of 41.7 and last-5-year-mean average P/E of 25.5 (’21 low P/E also excluded). I am below the last-5-year mean but above the 7-year median (27.5).
My Forecast Low P/E is 8.0. Since 2018, low P/E ranges from 7.5 in ’23 to 17.9 in ’20 with a last-5-year mean of 9.2. I am forecasting near bottom of the range (only ’23 is less).
My Low Stock Price Forecast (LSPF) is $16.80. Default ($11.00) given initial value from above seems unreasonably low at 76.4% less than previous close and 34.5% less than 52-week low. My selection is the 52-week low itself: still 64.2% less than the previous close (and results in an effective Forecast Low P/E of 12.3).
These inputs land ACMR in the HOLD zone with a U/D ratio of 0.6. Total Annualized Return (TAR) is 6.6%.
PAR (using Forecast Average—not High—P/E) of NEGATIVE 2.9% is unthinkable as an investment candidate. If a healthy MOS anchors this study, then I can proceed based on TAR instead (still lower than I seek in a small-size company).
To assess MOS, I compare my inputs with those of Member Sentiment (MS). Based on 90 studies done in the past 90 days (my study and 30 outliers excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, and Forecast Low P/E are 13.0%, 14.0%, 29.2, and 12.1. I am lower on growth rates but higher on P/E range.
MS high / low EPS are $3.17 / $1.60 vs. my $2.01 / $1.37 (per share). My high EPS is less due mainly to a lower growth rate.
MS LSPF of $18.80 implies a Forecast Low P/E of 11.8: less than the above-stated 12.1. MS LSPF is 2.9% less than the default $1.60/share * 12.1 = $19.36 that results in more conservative zoning. MS LSPF is 11.9% greater than mine, however.
MOS is moderate in the study. My growth rates are lower than analyst/MS ranges (except VL EPS). My LSPF is lower and MS TAR exceeds mine by 5.3% per year. I elevate forecast P/E range to get a valid study, though.
Regarding valuation, PEG is 6.5 per my projected P/E: way overvalued. Relative Value [(current P/E) / 5-year-mean average P/E] is also high at 1.3. M* says stock trades at a 3% discount to fair value.
My overall impression of this stock is nothing worth considering at this time. The C [Financial Health] grade from M* is due to significant margin deterioration (over 870 and 720 basis points in Q4 2025 for gross and operating margin, respectively), increased competition from newer local semiconductor entrants in the Chinese market, high stock volatility (2.66 beta), geopolitical tensions, soaring operating expenses (up 34% YOY in ’25), and inventory accumulation.
Per U/D, ACMR is a BUY under $28.70/share. BetterInvesting® TAR criterion would be met [64.4 / ((14.87 / 100 ) +1 ) ^ 5] = $32.20 given a forecast high price ~ $64 (no dividend).
A 90-day free trial to BetterInvesting® may be secured here (also see link under “Pages” section at top right of this page).
Categories: BetterInvesting® | Comments (0) | PermalinkUFPT Stock Study (3-6-26)
Posted by Mark on September 8, 2025 at 06:55 | Last modified: March 6, 2026 09:18I recently did a stock study on UFP Technologies Inc. (UFPT, $201.36).
M* writes:
> UFP Technologies Inc is a contract development and manufacturing
> organization that specializes in single-use and single-patient
> medical devices. The company manufactures its products by
> converting raw materials using laminating, molding, radio
> frequency, and impulse welding, and fabricating manufacturing
> techniques. It is an important link in the medical device supply
> chain and a valued outsource partner to many of the top medical
> device manufacturers in the world. The company’s single-use and
> single-patient devices and components are used in a wide range of
> medical devices, disposable wound care products, infection
> prevention, minimally invasive surgery, wearables, orthopedic
> soft goods, and orthopedic implant packaging.
Over the past decade, this small-size company grows sales and EPS at annualized rates of 17.7% and 26.7%, respectively. Lines are mostly up, straight, and parallel except for sales+EPS decline in ’20. Five- (10-) year EPS R^2 is 0.81 (0.89) and Value Line (VL) gives an Earnings Predictability score of 60. Shares outstanding increase 6.8% (0.7%/year).
Over the past decade, PTPM leads peer averages but trails the industry despite increasing from 8.4% to 13.7% (’25) with a last-5-year mean of 13.4%. ROE leads peer averages and is even with the industry while increasing from 7.1% to 16.7% (’25) with a last-5-year mean of 15.5%. Debt-to-Capital is less than peer and industry averages despite increasing from 0.8% to 26.7% (’25) with a last-5-year mean of 26.1%.
Quick Ratio is 1.4 and Interest Coverage 9.4 per M* who assigns “Narrow” [quantitative] Economic Moat and a B grade for Financial Health (BetterInvesting® website). VL rates the company B+ for Financial Strength.
With regard to sales growth:
- YF gives YOY ACE 6.0% and 5.7% for ’26 and ’27 (based on 4 analysts).
- Zacks gives YOY ACE 6.5% and 5.7% for ’26 and ’27, respectively (3 analysts).
- CFRA gives ACE 6.2% YOY and 5.9% per year for ’26 and ’25-’27, respectively (4).
I am forecasting below the range at 4.0% per year.
With regard to EPS growth:
- MarketWatch projects 10.5% YOY and 11.4% per year for ’26 and ’25-’27, respectively (based on 4 analysts).
- Nasdaq.com gives ACE 11.6% YOY for ’27 (3 analysts).
- YF gives YOY ACE 4.9% and 11.8% for ’26 and ’27, respectively (4).
- Zacks gives YOY ACE 4.5% and 11.6% for ’26 and ’27, respectively (3).
- VL gives ACE 14.3% annualized from 2024 to 2026 / 2027 (3).
- CFRA gives ACE 17.0% YOY and 14.4% per year for ’26 and ’25-’27, respectively (4).
Analyst estimates are scant with VL providing the longest-term estimate at only 2.5 years out. My 7.0% forecast is near bottom of the short- and longer-term range. Initial value is ’25 EPS of $8.75/share.
My Forecast High P/E is 26.0. Over the past 10 years, high P/E increases from 25.0 to 33.1 (’25) with a last-5-year mean of 35.2 and last-5-year-mean average P/E of 26.6. I am below the range.
My Forecast Low P/E is 13.0. Over the past 10 years, low P/E ranges from 10.3 in ’22 to 21.1 in ’21 with a last-5-year mean of 17.9. I am forecasting near bottom of the range [only ’22 and ’19 (10.6) are less].
My Low Stock Price Forecast (LSPF) is $140.00. Default ($114.10) given initial value from above seems unreasonably low at 43.3% less than previous close and 36.0% less than 52-week low. My [arbitrary] selection is 30.5% and 21.5% less, respectively (and results in an effective Forecast Low P/E of 16.0).
These inputs land UFPT in the HOLD zone with a U/D ratio of 1.9. Total Annualized Return (TAR) is 9.6%.
PAR (using Forecast Average—not High—P/E) of 3.5% is less than I seek for a small-size company. If a healthy margin of safety (MOS) anchors this study, then I can proceed based on TAR instead.
To assess MOS, I compare my inputs with Member Sentiment (MS). Based on 70 studies done in the past 90 days (my study and 38 other outliers excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, and Forecast Low P/E are 13.2%, 12.8%, 30.0, and 17.3 respectively. I am lower across the board.
MS high / low EPS are $15.68 / $8.63 vs. $12.27 / $8.75 (per share). My high EPS is less due mainly to a lower growth rate.
MS LSPF of $155.30 implies a Forecast Low P/E of 18.0: greater than the above-stated 17.3. MS LSPF is 4.0% greater than the default $8.63/share * 17.3 = $149.30 that results in more aggressive zoning. MS LSPF is also 10.9% greater than mine.
MOS is robust in the study because my inputs are [near or] less than [bottom of] historical/analyst/MS averages/ranges. Also backing this assessment is MS TAR exceeding mine by 5.9% per year and my lower LSPF.
Regarding valuation, PEG is 3.1 per my projected P/E: overvalued. Relative Value [(current P/E) / 5-year-mean average P/E] is slightly low at 0.86. M* says stock trades at a 9% discount.
Per U/D, UFPT is a BUY under ~$185/share. BetterInvesting® TAR criterion would be met [319.1 / ((14.87 / 100 ) +1 ) ^ 5] ~ $160 given a forecast high price ~$319 (no dividend).
A 90-day free trial to BetterInvesting® may be secured here (also see link under “Pages” section at top right of this page).
Categories: BetterInvesting® | Comments (0) | PermalinkHSA Strategy (Part 5)
Posted by Mark on September 5, 2025 at 07:00 | Last modified: March 5, 2026 09:18In Part 4, I discussed some different approaches to managing [investment] funds in Health Savings Accounts (HSA). I conclude today by addressing one other question: should the HSA be approached as a portfolio in and of itself or may it be used as one segment of the total portfolio?
Please see the second paragraph of Part 4 for the full disclaimer.
If I’m going to invest a segment of my overall portfolio to invest in individual stocks, then perhaps I want to do that in my HSA where the Triple Tax Advantage (see numbered list) provides most value. This would be great unless one of the stocks ends up a BetterInvesting® “Rule of Five” loser (see The 80% Rule”) thereby sapping the HSA forevermore since contributions are limited. Of course, it could be a “Rule of Five” winner and the latter [uncapped] potential benefit outweighs the former risk.
Treating the HSA as its own diversified portfolio can eliminate the risk of catastrophic loss but I see several disadvantages.
The first disadvantage, as alluded to above, is inefficient asset location. Maximize HSA tax-free compounding by allocating to high-growth equities and move low-growth assets (e.g. bonds) to a Traditional IRA or 401(k) where growth eventually gets taxed as ordinary income.
A second disadvantage is potential fatigue due to management complexity. If aiming to maintain a particular 60/40 or 70/30 equity/bonds split, then manual rebalancing trades will have to be done periodically for what is probably an individual’s smallest account. For those living in CA or NJ where the HSA’s tax-exempt status is not recognized, things get worse because rebalancing can trigger state capital gains taxes. Every dividend must also be tracked for state tax reporting.
A third disadvantage results from many HSA providers offering limited investment options. Many providers also require keeping at least $1,000–$2,000 cash in the account to invest [although a diversified portfolio may include this anyway].
Treating the HSA as a separate portfolio also makes it harder to monitor overall risk exposure. Being conservative in an HSA but aggressive in a 401(k) may result in an overall allocation that doesn’t actually match one’s risk appetite.
Inflation risk is a fifth potential disadvantage: returns on cash and/or bonds not outpacing rising medical costs.
In summary, treating an HSA as a standalone portfolio creates tax friction and management complexity that can erode long-term wealth. The better option seems to be inclusion with the high-growth segment of an overall diversified portfolio.
Categories: Accountability | Comments (0) | PermalinkTXRH Stock Study (3-4-26)
Posted by Mark on September 2, 2025 at 06:56 | Last modified: March 4, 2026 08:29I recently did a stock study on Texas Roadhouse Inc. (TXRH, $181.23).
M* writes:
> Texas Roadhouse Inc is a restaurant company operating predominantly
> in the casual dining segment. The company manages its restaurant
> and franchising operations by concept and, as a result, has
> identified Texas Roadhouse, Bubba’s 33, Jaggers, and retail
> initiatives as separate operating segments. In addition, it has
> identified Texas Roadhouse and Bubba’s 33 as reportable segments.
> Maximum revenue for the company is generated from the Texas
> Roadhouse segment, which is a moderately priced, full-service,
> casual dining restaurant concept offering steaks, a selection of
> ribs, seafood, chicken, pork chops, pulled pork, vegetable plates,
> and an assortment of hamburgers, salads, and sandwiches.
> Geographically, the majority of the firm’s restaurants are in
> the USA, with a few in foreign countries.
Over the past decade, this medium-size company grows sales and EPS at annualized rates of 13.3% and 18.3%, respectively. Lines are mostly up, straight, and parallel except for sales+EPS decline in ’20 (COVID-19 shutdowns) and an EPS dip in ’25. Ten-year EPS R^2 is 0.42 (probably over 0.80 with ’20 excluded) and Value Line (VL) gives an Earnings Predictability score of 40. Shares outstanding decrease 6.5% (0.7%/year).
Over the past decade, PTPM leads peer and industry averages while ranging from 0.8% in ’20 to 9.8% in ’24 with a last-5-year mean of 8.4%. ROE leads peer and industry averages while increasing from 15.7% (’16) to 27.6% (’25) with a last-5-year mean of 27.6%. Debt-to-Capital is less than peer and industry averages despite increasing from 6.5% (leases and rentals not included for ’16) to 40.0% (’25) with a last-5-year mean of 40.6%.
Quick Ratio is 0.38 and Interest Coverage N/A (no long-term debt) per M* who assigns “Wide” [quantitative] Economic Moat and a A grade for Financial Health (BetterInvesting® website). VL rates the company B++ for Financial Strength.
With regard to sales growth:
- YF gives YOY ACE 11.2% and 9.3% for ’26 and ’27 (based on 28 analysts).
- Zacks gives YOY ACE 11.3% and 9.1% for ’26 and ’27, respectively (8 analysts).
- VL projects 9.5% annualized from ’24-’30.
- CFRA projects 11.2% YOY and 10.3% per year for ’26 and ’25-’27, respectively.
- M* offers a 2-year ACE of 10.2%.
I am forecasting below the range at 9.0% per year.
With regard to EPS growth:
- MarketWatch projects 10.3% and 13.5% per year for ’25-’27 and ’25-’28, respectively (based on 33 analysts).
- Nasdaq.com gives ACE 23.1% YOY and 21.9%/year for ’27 and ’26-’28 (11 / 11 / 2 analysts for ’26 / ’27 / ’28).
- Seeking Alpha projects 4-year annualized growth of 15.8%.
- Finviz gives ACE 5-year annualized growth of 14.8% (12).
- LSEG estimates LTG at 15.8%.
- YF gives YOY ACE 3.0% and 22.1% for ’26 and ’27, respectively (29).
- Zacks gives YOY ACE 4.1% and 23.2% for ’26 and ’27 (11) along with 5-year annualized growth of 14.5%.
- VL projects 12.8% annualized from ’24-’30.
- CFRA projects 3.1% YOY and 12.3% per year for ’26 and ’25-’27, respectively.
- M* gives long-term ACE of 12.0% per year.
My 11.0% forecast is below the long-term-estimate range (mean of six: 14.3%). Initial value is ’25 EPS of $6.10/share.
My Forecast High P/E is 25.0. Over the past 10 years (excluding ’20), high P/E ranges from 25.6 in ’22 to 34.2 in ’18 with a last-5-year mean of 29.8 and last-5-year-mean average P/E of 25.0. I am below the 10-year range.
My Forecast Low P/E is 19.0. Over the past 10 years (excluding ’20), low P/E ranges from 17.3 in ’22 to 24.4 in ’25 with a last-5-year mean of 20.1. I am forecasting near bottom of the range [only ’22 and ’24 (17.8) are less].
My Low Stock Price Forecast (LSPF) is $126.00. Default ($115.70) given initial value from above seems unreasonably low at 36.2% less than previous close and 22.2% less than 52-week low. My [arbitrary] selection is 30.5% and 15.3% less, respectively (and results in an effective Forecast Low P/E of 20.7).
Over the past 10 years (excluding ’20), Payout Ratio (PR) ranges from 34.3% in ’21 to 48.8% in ’19 with a last-5-year mean of 42.3%. I am forecasting below the range at 34.0%.
These inputs land TXRH in the HOLD zone with a U/D ratio of 1.6. Total Annualized Return (TAR) is 9.5%.
PAR (using Forecast Average—not High—P/E) of 6.1% is less than I seek for a medium-size company. If a healthy margin of safety (MOS) anchors this study, then I can proceed based on the TAR instead.
To assess MOS, I compare my inputs with Member Sentiment (MS). Based on 102 studies done in the past 90 days (my study and 44 other outliers excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, Forecast Low P/E, and PR are 10.0%, 11.3%, 29.0, 19.0, and 48.1% respectively. I am lower on all but Forecast Low P/E. VL projects a future average annual P/E of 24.0 that is equal to MS and greater than mine (effectively 22.9).
MS high / low EPS are $11.04 / $6.42 versus my $10.28 / $6.10 (per share). My high EPS is less due to a lower growth rate. VL high EPS of $13.30 soars above both.
MS LSPF of $124.30 implies a Forecast Low P/E of 19.4: greater than the above-stated 19.0. MS LSPF is 1.9% greater than the default $6.42/share * 19.0 = $121.98 that results in more aggressive zoning. MS LSPF is 1.4% less than mine, however.
MOS is robust in the study because my inputs are [near or] less than [bottom of] historical/analyst/MS averages/ranges. Also backing this assessment is MS TAR exceeding mine by 5.2% per year.
Regarding valuation, PEG is 2.0 and 2.4 per Zacks and my projected P/E: slightly overvalued (0.4 per M* seems low enough to be erratum). Relative Value [(current P/E) / 5-year-mean average P/E] is elevated at 1.2. “Quick and Dirty DCF” calculates stock overvalued by 32% (M* currently says 12% premium despite the aforementioned 0.4).
This is Ken Kavula’s Manifest Investing Round Table selection for Feb 2026. My inputs are a bit lower.
Per U/D, TXRH is a BUY under ~$159/share. BetterInvesting® TAR criterion would be met [224.3 / ((13.47 / 100 ) +1 ) ^ 5] ~ $119 given a forecast high price ~$224.
A 90-day free trial to BetterInvesting® may be secured here (also see link under “Pages” section at top right of this page).
Categories: Uncategorized | Comments (0) | PermalinkBRO Stock Study (3-3-26)
Posted by Mark on August 28, 2025 at 07:09 | Last modified: March 4, 2026 08:10I recently did a stock study on Brown & Brown, Inc. (BRO, $72.36).
M* writes:
> Brown & Brown Inc is a diversified insurance agency, wholesale
> brokerage, insurance programs, and service. The company’s business
> is divided into two reportable segments: (i) the Retail segment,
> and (ii) the Specialty Distribution segment. The Retail segment
> provides a broad range of insurance products and services to
> commercial, public and quasi-public entities, and to professional
> and individual customers, as well as non-insurance warranty
> services and products through automobile and recreational vehicle
> dealer services businesses. The Specialty Distribution segment
> consists of wholesale brokerage and specialty businesses.
> Its geographic area is U.S, U.K and Others.
Over the past decade, this medium-size company grows sales and EPS at annualized rates of 14.4% and 15.6%, respectively. Lines are mostly up, straight, and parallel except for EPS dips in ’18 and ’25. Five-year EPS R^2 is 0.81 and Value Line (VL) gives an Earnings Predictability score of 95. Shares outstanding increase 13.6% (1.4%/year).
Over the past decade, PTPM leads peer and industry averages while ranging from 22.1% (’19) to 27.7% (’24) with a last-5-year mean of 25.7%. ROE trails peer and industry averages while falling from 11.0% to 8.6% (’25) with a last-5-year mean of 14.1%. Debt-to-Capital is less than peer and industry averages despite increasing from 31.3% to 38.7% (’25) with a last-5-year mean of 40.4%.
Quick Ratio is 0.56 and Interest Coverage 5.5 per M* who assigns “Narrow” Economic Moat but a C grade for Financial Health (BetterInvesting® website). VL rates the company A for Financial Strength (Interest Coverage 7.8).
With regard to sales growth:
- YF gives YOY ACE 21.9% and 6.9% for ’26 and ’27 (based on 11 analysts).
- Zacks gives YOY ACE 23.5% and 5.9% for ’26 and ’27, respectively (6 analysts).
- VL projects 12.2% annualized from ’24-’29.
- CFRA projects 15.0% YOY and 13.5% per year for ’26 and ’25-’27, respectively.
- M* offers a 2-year ACE of 15.4%.
I am forecasting below the range at 6.0% per year.
With regard to EPS growth:
- MarketWatch projects 8.7% and 8.2% per year for ’25-’27 and ’25-’28, respectively (based on 20 analysts).
- Nasdaq.com gives ACE 9.9% YOY and 8.4%/year for ’27 and ’26-’28 [9 / 8 / 1 analyst(s) for ’26 / ’27 / ’28].
- Seeking Alpha projects 4-year annualized growth of 7.3%.
- Argus projects 5-year annualized growth of 10.0%.
- Finviz gives ACE 5-year annualized growth of 8.1% (6).
- LSEG estimates LTG at 7.4%.
- YF gives YOY ACE 6.1% and 10.2% for ’26 and ’27, respectively (16).
- Zacks gives YOY ACE 7.0% and 9.7% for ’26 and ’27 (7) along with 5-year annualized growth of 7.3%.
- VL projects 9.7% annualized from ’24-’29.
- CFRA projects 5.6% YOY and 7.8% per year for ’26 and ’25-’27 along with 3-year CAGR of 11.0%.
My 7.0% forecast is below the long-term-estimate range (mean of six: 8.3%). Initial value is ’25 EPS of $3.16/share.
My Forecast High P/E is 25.0. Over the past 10 years, high P/E ranges from 18.7 in ’17 to 39.8 in ’25 with a last-5-year mean of 32.6 and last-5-year-mean average P/E of 26.8. I am near bottom of the range (only ’17 is less).
My Forecast Low P/E is 15.0. Over the past 10 years, low P/E ranges from 14.6 in ’17 to 24.1 in ’25 with a last-5-year mean of 20.9. I am forecasting near bottom of the range (only ’17 is less).
My Low Stock Price Forecast (LSPF) of $48.00 is default based on initial value from above. This is 33.7% less than previous close and 26.9% less than the 52-week low.
Over the last 10 years, Payout Ratio (PR) falls from 27.6% in ’16 to 19.5% in ’25 with a last-5-year mean of 17.4%. I am forecasting below the range at 15.0%.
These inputs land BRO in the HOLD zone with a U/D ratio of 1.6. Total Annualized Return (TAR) is 9.5%.
PAR (using Forecast Average—not High—P/E) of 4.9% is less than I seek for a medium-size company. If a healthy margin of safety (MOS) anchors this study, then I can proceed based on TAR instead.
To assess MOS, I compare my inputs with those of Member Sentiment (MS). Based on 77 studies done in the past 90 days (my study and 37 other outliers excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, Forecast Low P/E, and PR are 11.7%, 11.3%, 29.2, 19.7, and 17.6% respectively. I am lower across the board. VL projects a future average annual P/E of 22.5 that is less than MS (24.5) and greater than mine (20.0).
MS high / low EPS are $5.57 / $3.20 versus my $4.43 / $3.16 (per share). My high EPS is less due to a lower growth rate. VL high EPS of $5.50 is in the middle.
MS LSPF of $61.00 implies a Forecast Low P/E of 19.1: less than the above-stated 19.7. MS LSPF is 3.2% less than the default $3.20/share * 19.7 = $63.04 that results in more conservative zoning. MS LSPF is 27.1% greater than mine, however.
MOS is robust in the study because my inputs are [near or] less than [bottom of] historical/analyst/MS averages/ranges. Also backing this assessment are MS TAR exceeding mine by 8.6% per year [arguably too high] and the much greater LSPF.
Regarding valuation, PEG is 2.2 and 3.0 per Zacks and my projected P/E: slightly overvalued (1.7 per M*). Relative Value [(current P/E) / 5-year-mean average P/E] is somewhat low at 0.84. “Quick and Dirty DCF” calculates stock undervalued by 29% (M* currently says 25% discount).
I wish I hadn’t seen two things about this stock. First, the Financial Health grade of C (M*) is diametrically-opposed to the VL A-rating (Financial Strength). Also questionable is a “smart score” of 1 (“likely underperform”) by CNN Business. I don’t know how reliable the metric, but I can never recall seeing a 1 before.†
On the other hand, Cy Lynch does present the company as his Manifest Investing Round Table selection for Feb 2026.
Per U/D, BRO is a BUY under ~$63.50/share. BetterInvesting® TAR criterion would be met [110.8 / ((14.07 / 100 ) +1 ) ^ 5] ~ $57 given a forecast high price ~$111.
A 90-day free trial to BetterInvesting® may be secured here (also see link under “Pages” section at top right of this page).
†—“Smart score” pertains only to the next 12 months rather than long-term.
HSA Strategy (Part 4)
Posted by Mark on August 25, 2025 at 07:12 | Last modified: March 1, 2026 10:49In the last three posts, I have been definining and explaining Health Savings Accounts (HSA). Now let’s consider management.
Please remember this is not professional advice and not intended to replace the services of a tax advisor or attorney. HSA contributions, distributions, and eligibility are IRS-governed and subject to change. As the account holder, you are responsible for verifying eligibility, tracking transactions, and complying with IRS regulations. While some HSA funds are FDIC-insured, investment options are not bank-guaranteed and may lose value. Information provided here is [mostly] accurate at time of writing but subject to change based on new legislation or IRS guidance.
I have already opened an HSA with Fidelity because I deem that a reputable brokerage very diverse in terms of what types of investments are allowed. Next, I need to fund and invest.
A conservative management approach would be to use the HSA to pay for doctor visits and prescriptions throughout the year while maintaining enough cash to cover the annual HDHP deductible or out-of-pocket maximum. Being forced to sell investments during a market downturn to pay for medical emergency is thus circumvented.
A more aggressive approach would be to invest the HSA aggressively (100% in equities) with the intention of letting it grow tax-free for many years. This applies to those with outside funds to cover any immediate medical needs. In essence, the HSA then becomes a Roth IRA on steroids: tax-deductible contributions and tax-free growth. Examples of allocation include Vanguard Total Stock Market (VTI) or Fidelity Total Market Fund (FZROX), large-cap S&P 500 (VOO or SPY), or higher-risk growth funds like Nasdaq-100 (QQQM or QQQ) or Fidelity Semiconductor (FSELX). The latter is of particular interest because tax-free growth on high-returning assets can be priceless.
To minimize needless charges, research expense / tax-cost ratios and choose the lowest between equivalent funds. In today’s competitive environment, mutual funds should definitely be of the no-load variety.
A hybrid option would be to leave $1,000 – $3,000 in cash (or a money market fund) for emergencies with anything more invested in equities. Once again if discretionary income [for non-essentials] is available, then the bills could be paid from elsewhere and reimbursed (withdrawn) from the HSA at any future point.
An issue I often debate is whether it is okay to invest aggressively in tax-advantaged accounts given the increased risk of loss. On one hand, aggressive investment can squeeze maximum value out of tax-advantaged status. On another hand, losses in tax-advantaged accounts cannot be used to offset other gains. This begs for the standard recommendation to invest aggressively in proportion to time remaining until retirement to allow portfolio recovery in case of market downturn.
Should the HSA be treated as a separate portfolio, though, or as one segment of total net worth? I will resume here next time.
Categories: Accountability | Comments (1) | PermalinkHSA Strategy (Part 3)
Posted by Mark on August 22, 2025 at 07:07 | Last modified: February 27, 2026 09:59Today I plan to wind up discussion of Health Savings Accounts (HSA) prior to deliberation over how to manage my own. Please remember this is for educational purposes only.
I see several good reasons to have an HSA for those fitting the suitability profile described in the fifth paragraph here. HSAs allow for delayed reimbursement: pay now, save the receipts, and reimburse oneself in the future thereby allowing more time for tax-free growth. Although contributions are out-of-pocket funds that could otherwise be used elsewhere, the bulleted list here for what does qualify is extensive. Odds are one will find plenty on which to spend HSA funds unless precluded by sudden death at a relatively young age.
Most HSA providers allow investment in stocks, mutual funds, or ETFs once a minimum threshold (ranging from $2,000 down to $0) is reached.
A final benefit to having an HSA is its function as a retirement hedge. Flexible spending accounts [owned by employer] carry “use-it-or-lose-it” [most commonly by year-end or final day of employment] risk. HSA funds belong to the individual, never expire, will roll over at year-end, and will remain after job change or retirement. HSAs also have a built-in safety net should one reach retirement with a large balance: opportunity to use the funds for non-qualified healthcare expenses while still being taxed like a traditional IRA (advantaged at tax-deferred just not as advantageous as tax-free). Another retirement hedge is the triple tax advantage (see numbered list) making HSAs widely considered to be the most tax-efficient retirement vehicle available in the United States. Finally, HSAs hedge against outliving other retirement assets by having no required minimum distributions (and tax-free passage after death to surviving spouse).
In thinking about the HSA as a tool to cover personal health expenses forevermore, I wondered how big an HSA could possibly get or how much they are worth on average.
Per GoogleAI, the average HSA balance rose to approximately $3,997 by mid-2025 with total HSA assets reaching ~$159 billion across 40 million accounts. Specific providers like Lively report higher average balances of $5,457 (up 11% YOY) for their clients. Accounts with invested funds average $22,635—roughly nine times larger than non-investment accounts.
For 2026, average HSA balances are projected to reach $4,400 with total HSA assets rising to $189 billion on 44 million accounts. About 20% of participants (up from 18%) are expected to have invested funds.
IRS sets the maximum allowable contribution for each year. In 2025, these are $4,300 or $8,550 for individuals or families, respectively. Those turning 55 by Dec 31 can contribute an additional $1,000 (“catch-up”). Allowable 2026 contributions for individuals or families increase to $4,400 or $8,750, respectively, with catch-up remaining the same.
I will continue next time with HSA investment planning.
Categories: Accountability, Financial Literacy | Comments (1) | PermalinkHSA Strategy (Part 2)
Posted by Mark on August 19, 2025 at 07:43 | Last modified: February 24, 2026 16:39Today I continue with my discussion of Health Savings Accounts (HSA) before moving on to decide how I will invest mine.
This is for educational purposes only. Please see the full disclaimer in the second paragraph here.
As previously mentioned, HSA eligibility requirements start with high-deductible health [insurance] plan (HDHPs). These are characterized by lower monthly premiums and higher annual deductibles than traditional plans. For 2026, the IRS defines HDHPs as plans with a minimum deductible of $1,700 for individuals and $3,400 for families (more on this below). With HDHPs, one usually pays the full cost of most medical services out of pocket until the annual deductible is reached at which point copays or coinsurance apply. Monthly premiums are often less than standard PPOs or HMOs. In-network preventive services (e.g. annual physicals or vaccines) are usually covered 100% even before meeting the deductible.
HDHPs must also adhere to maximum out-of-pocket limits. For 2026, this is $8,500 ($17,000) for individuals (families). Anything higher is viewed by IRS as “too expensive” for the consumer and does not qualify for tax advantages of an HSA.
Some people are better suited to HDHPs. Mostly healthy individuals with few doctor visits aiming to save on monthly costs are ideal. HDHPs are not such a good fit for those with chronic conditions or people requiring frequent specialist visits and prescriptions since upfront costs can be high. HDHPs attract savers who want to use HSAs as long-term, tax-advantaged investment tools for future healthcare needs in addition to those with a financial cushion who can afford to pay greater deductibles in cases of emergency.
Perhaps because I’ve grown accustomed, I did not think $1,700 (individual) to be “high deductible.” It actually is. Employer-sponsored plans average $1,400 for an individual PPO deductible while many zero-deductible HMOs and high-tier PPOs also exist (copay-only for most services from day one). For individual Marketplace insurance, gold plan deductibles average ~$1,500 while platinum plans have zero or very low deductibles often averaging < $100.
Aside from the HDHP, other eligibility criteria for HSA contribution include:
- No other medical coverage (e.g. traditional PPO or a spouse’s non-HDHP) though dental and vision plans are allowed.
- Not enrolled in Medicare Part A or B.
- Not a dependent claimed on someone else’s tax return.
HSA parameters vary by year. For 2026 (2025), individual contribution limit is $4,400 ($4,300) and minimum HDHP deductible is $1,700 ($1,650). “Catch-up” contribution allowed for ages 55+ (on or before Dec 31) is additional $1,000 for both years.
I will continue next time.
Categories: Financial Literacy | Comments (1) | PermalinkHSA Strategy (Part 1)
Posted by Mark on August 14, 2025 at 06:57 | Last modified: February 24, 2026 12:22As mentioned in the second paragraph here, today I will begin discussing Health Savings Accounts (HSA) with the goal being how to invest mine.
Here is a legal disclaimer for the current blog mini-series.* This is not professional advice and not intended to replace the advice of a tax advisor or attorney. HSA contributions, distributions, and eligibility are IRS-governed and subject to change. As the account holder, you are responsible for verifying eligibility, tracking transactions, and complying with IRS regulations. While some HSA funds are FDIC-insured, investment options are not bank-guaranteed and may lose value. Information provided here is [mostly] accurate at time of writing but subject to change based on new legislation or IRS guidance.
Given that disclaimer, let me define HSAs as tax-advantaged personal savings accounts for individuals enrolled in high-deductible health [insurance] plans (HDHP).
HSAs offer the triple tax advantage:
- Tax-deductible contributions lower taxable income by corresponding amount.
- Tax-free growth means interest or capital gains on investment are not taxed [unlike tax-deferred 401(k) earnings].
- Tax-free withdrawals means proceeds used to pay for qualified medical expenses are not taxed.
Upon turning 65 years of age, HSA funds may be withdrawn for purposes other than qualified medical expenses but taxed as regular income [like the 401(k)]. If used for purposes other than qualified medical expenses prior to age 65, then HSA funds are taxed as regular income and subject to a 20% penalty.
Qualified medical expenses (always keep receipts as documentation) are rather extensive:
- Medical services including ambulance services, doctor visits, hospital stays, laboratory fees, surgery, and X-rays.
- Dental and vision services including braces, cleanings, contact lenses, dentures, eyeglasses, fillings, and LASIK.
- Prescriptions and OTC (no prescription required) products including acne treatment, insulin, and menstrual products.
- Equipment and supplies such as bandages, blood sugar test kits, breast pumps, crutches, hearing aids, and masks.
- Acupuncture, addiction treatment, chiropractic care, physical therapy, psychiatric care, and smoking cessation programs.
- Capital expenses to accommodate disabilities (e.g. grasp bars, railings, and ramps).
- Costs for [primarily] medical-care transportation and related travel (i.e. mileage, tolls, parking, bus/airfare).
- Doctor-recommended special education (e.g. tutoring for children with learning disabilities due to mental impairment).
- Medicare (ages 65+) premiums (A-D) [can no longer contribute once Medicare-enrolled but may spend existing balance].
- Premiums paid for COBRA [medical, dental, and vision] continuation coverage if job lost to a qualifying event.
- Premiums paid while receiving federal or state unemployment compensation.
- Premiums paid for qualified long-term care insurance subject to age-based caps on annual tax-free withdrawal amount.
I will continue next time.
* — In case my buddy Marc (with a “c”) is out there reading