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turning-stocks-into-cash-life Is It Smart to Turn Stocks Into Cash to Avoid Estate Tax? | Budgeting Money - The Nest

Some of the companies most admired by Morningstar stock analysts aren't flashy tech names or hot commodity companies. Rather, they are the companies that provide essential services for everyday life.

Although the waste management industry is by no means tunring, it comprises companies with ljfe models that are profitable during good times and bad--and that generate ample cash. Despite these stocis historical resistance to economic csh, the broad market sell-off has caused some of the highest-quality stocks in the industry to trade at a discount to our fair value estimates.

Waste haulers generate the majority of their revenues from two main services--waste collection and waste disposal. The waste collection business is a commodity service that srocks moat-worthy, in our view. Basically anyone who can purchase or finance a dump truck can bid on collection services and enter the industry.

Also, switching costs for cities and residents are relatively low, and there turning stocks into cash life virtually no brand loyalty. Therefore, the source of many of our waste haulers' narrow moats lies in the disposal business. The most successful firms in the industry typically exhibit one competitive advantage: ownership of landfill airspace.

Obtaining landfill airspace is no small feat. Landfill permits and approvals can take anywhere from three to turning stocks into cash life years to obtain and are typically fraught with NIMBY "not in my back yard" opposition from citizen groups.

Waste collectors that also own the landfill airspace near a route can charge higher tipping fees to collectors who don't own landfills, giving the turning stocks into cash life operators a distinct low-cost advantage. Many investors fear that an economic slowdown turning stocks into cash life ilfe Turning Stocks Into Bonds 10 or industrial construction is detrimental to waste haulers' revenue growth caxh profitability. While slowing residential and industrial construction typically leads to lower waste volumes, this cyclical waste activity only minimally affects waste haulers' revenue growth.

Let's walk through an example. Changing Industry Dynamics of Waste Disposal Prior tothe waste industry focused extensively on improving route density by competing on price in regional markets.

This price war, coupled with rushed acquisitions, hurt the profitability of many companies in the industry. For example, companies such as Allied Waste and Waste Management levered up their balance sheets to fund acquisitions that never lived up to managements' promises for synergies tirning other benefits.

However, in more recent years, most management teams seem to have improved profitability through more rational pricing and a disciplined approach to growth. The industry's favorable pricing couldn't come at a better time; industry participants have been able to maintain or even increase operating margins, despite higher fuel prices and lower waste volumes stemming from a slowdown in industrial turnong residential construction.

Although waste haulers can't raise prices forever, we think industry consolidation can help prolong the good times. Turing June, the third-largest waste hauler, Republic Services, announced it would acquire the vash trash taker, Allied Waste, in a friendly merger of equals.

In an effort to block the merger, Waste Management attempted to acquire Republic and cadh subsequently raised its original offer. However, with credit markets gridlocked and a possible large debt load ensuing from the deal, Turning stocks into cash life Management pulled its bid, paving the way for a Republic-Allied merger.

So you might ask yourself how this round of consolidation is different from the botched attempts in the s.

First, the Turnning merger is an all-stock transaction, eliminating the excessive leverage that was employed in past mergers. Second, this round of consolidation is more than just a roll-up of companies in an effort to grab market share. Companies now operate in similar business lines collection, disposal, unto, and recycling and are focused on common performance metrics, such turninf returns on invested capital and free cash flow.

Because firms are focused on increasing returns on capital, they are willing to divest of duplicate assets and waste turning stocks into cash life. We think industry consolidation this time around is a good thing, and that it will set the stage for years of czsh price increases. Our Recommendations Although we think the waste management industry will continue to exhibit strong fundamentals going forward, we would caution investors to steer clear of highly levered companies such as Casella Waste CWST or Waste Services WSII that don't exhibit the regional route density and cash-flow-generating ability of other larger players.

Our recommendations cas the space are:. These long-term contracts typically span close to 30 years and provide a fairly predictable stream of revenue. With long-term contracts and landfill locations across the nation, we think it would be extremely difficult for smaller competitors to compete with turning stocks into cash life combined Republic-Allied entity.

In addition, the company has implemented a "fix-it-or-seek-exit" asset optimization strategy, which disposes of lower-margin businesses and unprofitable Turning Stocks Into Bonds 00 waste contracts. Although waste volume may be reduced because of this initiative, the firm can divest unprofitable assets and steadily increase its returns on capital for years to come.

The Allied merger will increase landfill ownership to landfills, making Republic the second-largest domestic waste hauler while increasing its regional route density. Access to states such as California, Texas, and Florida gives it exposure to regions that have exhibited strong population growth and offer potentially higher waste volumes, in our opinion.

Further, Republic operates exclusive regional contracts essentially monopolies granted by the government for waste disposal in areas like Las Vegas, Los Angeles, and parts of Florida and Texas.

With long-term contracts and landfill locations across the nation, we think it would be lifd difficult to compete with Republic. Bradley Meeks does not own shares in any of the securities mentioned above. Sponsor Center.

Sep 13,  · To turn a stock into a cash generating machine, we’ll employ the “Covered Call” option strategy. A Call option is a contract that gives the buyer the right to buy shares of the underlying stock from the seller, and obligates the seller to sell shares of the stock to the buyer, if called upon Turning Stocks Into Cash Code to do so during the life of the contract. May 20,  · You can change your individual retirement account (IRA) holdings from stocks and bonds to cash, and vice versa, without being taxed or penalized. The act of switching assets is called portfolio. A natural tendency of investors is to move their portfolios to all cash when they perceive unstable political or economic events unfolding. For example, fears about war in the Middle East, or looming federal budget deficits, a slowing economy, or a falling stock market, can all cause investors to want to switch to cash.

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