UFPT 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 (0) | 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
Near-Term Road Map
Posted by Mark on August 11, 2025 at 07:29 | Last modified: February 24, 2026 08:38I have multiple projects I wish to pursue in the near future.
With regard to blogging, I want to assemble an action plan based on the recently completed incident report [and of course publish the other one as well]. I want to explain Health Savings Accounts (HSA), what benefits they offer, and determine what investment approach I will use for mine. Similarly, I want to determine an investment approach for my IRA in terms of passive and broadly diversified (ETFs) with respect to work done by Craig Israelsen and Paul Merriman.
I want to give AT a good, hard look since I planned incorporate into my trading portfolio after last year’s debacle. Now that I finally finished the report linked above, it’s time to stop dragging my feet and follow-through here as well. Before actually reaching out to SO with questions and/or an offer, I should go back and review the series of articles written a few years ago. I may also try and refresh correspondence with TS for some ideas and background.
Speaking of modifying the trading plan, I’d like to give another look at 0 DTE approaches whether they be ORB, A14, or something else. I also want to take a closer look at QDTE as a repository for storing money I plan to deploy into stock purchases. Good places to start this examination may include articles here, here, and the video here.
I want to code my Positions spreadsheet to make adding new inventory easier (e.g. inserting new line and populating with all necessary components).
I want to review Python and create code to scrape sales and earnings estimates for FC reports. Maybe I can even develop some sort of AI script or prompts to help write some of the more formulaic paragraphs.
Finally, I want to refresh my math knowledge and look into tutoring either on a volunteer basis or with proceeds going to charity or non-profit(s). I’d also like to look into teaching investing concepts to students (high school) and maybe reaching out again to SGL for inspiration/direction to see what she’s done lately and also to KR of NE Ohio Chapter to hear more about her background and how I might get this started.
Categories: Accountability | Comments (1) | PermalinkNOW Stock Study (2-21-26)
Posted by Mark on August 8, 2025 at 09:05 | Last modified: February 21, 2026 11:17I recently did a stock study on ServiceNow, Inc. (NOW, $104.27).
M* writes:
> ServiceNow Inc provides software solutions to structure and automate
> various business processes via a SaaS delivery model. The company
> primarily focuses on the IT function for enterprise customers.
> ServiceNow began with IT service management, expanded within the
> IT function, and more recently directed its workflow automation
> logic to functional areas beyond IT, notably customer service,
> HR service delivery, and security operations. ServiceNow also
> offers an application development platform as a service.
Since 2019, this large-size company grows sales and EPS at annualized rates of 24.9% and 41.9%, respectively (’16-’18 excluded due negative earnings in two of three years). Lines are mostly up, straight, and narrowing except for EPS declines in ’20 and ’24. Seven- (Five-) year EPS R^2 is 0.51 (0.78). Value Line (VL) gives an Earnings Predictability score of 30. Shares outstanding increase 6.1% (1.0%/year).
Since 2019, PTPM trails peer and industry averages despite increasing from 1.9% to 17.0% (’25) with a last-5-year mean of 10.7%. ROE is about even with peer and industry averages despite falling from 42.2% to 15.5% (’25) with a last-5-year mean of 13.7%. Debt-to-Capital is less than peer and industry averages while falling from 34.7% to 15.6% (’25) with a last-5-year mean of 25.2%.
Quick Ratio is 0.85 and Interest Coverage 99.3 per M* who assigns “Wide” Economic Moat, gives “Exemplary” rating for Capital Allocation, but a B grade for Financial Health (BetterInvesting® website). VL rates the company A for Financial Strength.
With regard to sales growth:
- YF gives YOY ACE 20.1% and 18.5% for ’26 and ’27 (based on 41 analysts).
- Zacks gives YOY ACE 20.3% and 18.0% for ’26 and ’27, respectively (13 analysts).
- VL projects 13.8% annualized from ’24-’29.
- CFRA projects 20.8% YOY and 19.2% per year for ’26 and ’25-’27, respectively.
- M* offers a 2-year ACE of 19.1% and projects 17.0% per year x5 years (analyst report).
I am forecasting below the range at 13.0% per year.
With regard to EPS growth:
- MarketWatch projects 20.3% and 21.2% per year for ’25-’27 and ’25-’28, respectively (based on 47 analysts).
- Nasdaq.com gives ACE 25.4% YOY and 27.5%/year for ’27 and ’26-’28 (17 / 13 / 2 analysts for ’26 / ’27 / ’28).
- Seeking Alpha projects 4-year annualized growth of 23.6%.
- Argus projects 5-year annualized growth of 21.0%.
- Finviz gives ACE 5-year annualized growth of 20.6% (9).
- LSEG estimates LTG at 20.2%.
- YF gives YOY ACE 18.6% and 20.4% for ’26 and ’27, respectively (41).
- Zacks gives YOY ACE 17.7% and 19.6% for ’26 and ’27 (14) along with 5-year annualized growth of 23.9%.
- VL projects 26.3% annualized from ’24-’29.
- CFRA projects 19.4% YOY and 18.8% per year for ’26 and ’25-’27 along with 3-year CAGR of 17.0%.
- M* gives long-term ACE of 27.2% and projects 24.8% from ’25-’29 in Equity Report.
My 19.0% forecast is below the long-term-estimate range (mean of eight: 23.5%). Initial value is ’25 EPS of $1.67/share.
My Forecast High P/E is 53.0. Since 2019, three of seven are over 400 (highest 960). Excluding those as extreme, high P/E ranges from 85.6 in ’23 to 169 in ’24 with a last-5-year mean of 133 and last-5-year-mean average P/E of 103 (corresponding years excluded from low P/E calculation). I am below the range (and current P/E of 62.5).
My Forecast Low P/E is 35.0. Since 2019, three of seven are over 200 (highest 405). Excluding those as extreme, low P/E ranges from 42.0 in ’23 to 93.3 in ’24 with a last-5-year mean of 72.2. I am forecasting below the range.
My Low Stock Price Forecast (LSPF) is $70.00. Default ($58.40) based on initial value from above seems unreasonably low at 44.0% less than the previous close and 40.4% less than the 52-week low. My [arbitrary] selection is 32.9% and 28.6% less, respectively. My Forecast Low P/E is effectively $70.00 / $1.67 = 41.9.
These inputs land NOW in the BUY zone with a U/D ratio of 3.2. Total Annualized Return (TAR) is 15.6%.
PAR (using Forecast Average—not High—P/E) of 11.2% is decent for a large-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 70 studies done in the past 90 days (my study and 18 outliers excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, and Forecast Low P/E are 17.1%, 20.1%, 76.0, and 50.0 respectively. I am lower across the board. VL [M*] projects a future average annual P/E of 50.0 [15.4—unreasonably low and I suspect they use current rather than future stock price] that is less than MS (63.0) and greater than mine (effectively 47.5).
MS high / low EPS are $4.16 / $1.67 versus my $3.99 / $1.67 (per share). My high EPS is less due to a lower growth rate. VL [M*] high EPS of $4.40 [$4.05] is higher than both [in the middle].
MS LSPF of $83.80 implies a Forecast Low P/E of 50.2, which is almost equal to the above-stated 50.0. MS LSPF is 19.7% greater than mine, however: much more aggressive.
MOS is robust in the study because my inputs are near or below historical/analyst/MS averages/ranges. Also backing this assessment are MS TAR exceeding mine by 5.1% per year and the greater LSPF.
Regarding valuation, PEG is 1.1 and 2.8 per Zacks and my projected P/E—slightly overvalued, perhaps (M* is undervalued at 0.89). Relative Value [(current P/E) / 5-year-mean average P/E] is quite low at 0.61. “Quick and Dirty DCF” calculates stock overvalued by ~23% (high projected CapEx).
Per U/D, NOW is a BUY under ~$106/share. BetterInvesting® TAR criterion would be met [215.5 / ((14.87 / 100 ) +1 ) ^ 5]
~ $108 given a forecast high price ~$216 (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) | Permalink