Our panelists give you the scoop on all the inside business information before you hear it anywhere else in The Informer segment:
David Asman: Chana, what do you have for us on retailers (search)? What’s a good one?
Chana Schoenberger, staff writer: Well, I like Target (TGT). I was actually interviewing a professor at Harvard Business School last week, a very well dressed, snappy woman, who could afford to shop anywhere. She said that Target is one of her favorite stores, and I thought, “This is very interesting.” A lot of the retailers have been having bad times recently. SARS (search) and the war and, of course, the recession affected their results, and people are saying the second half is going to be better. So I think that Target is a good bet now.
David Asman: And Mike, if they’ve made money in this market, they can make money in any market, right?
Mike Ozanian, senior editor: The stock’s real cheap right now, it’s a great value. It sells at about one times sales. But I think if I was going to play the retail sector, I would go with Wal-Mart (WMT). It’s much more profitable because they turn over their inventory much faster.
David Asman: Chana, is Wal-Mart better?
Chana Schoenberger: Wal-Mart is the biggest retailer in the world, so it has an extremely efficient distribution system. However, Target is just snappier, and more chic, people like it.
David Asman: And, Mike, you’ve got another retailer.
Mike Ozanian: 99 Cent Stores (NDN). Everything they sell goes for that price (99 cents), and why I like them is because they’re shifting their strategy. Instead of renting more of their stores, leasing the property, they’re buying it, and they’re owning it. So when the property value goes up, they get to participate in the appreciation of the land as well. This was the strategy that made McDonald’s (MCD) very successful in its glory days.
Chana Schoenberger: You have to look at what’s happening to McDonald’s now. I don’t know if you want to buy a real estate play right now.
Mike Ozanian: We’re talking 10-15 years ago with McDonald’s.
David Asman: All right, Bill. Let’s talk about college savings. It’s a tough subject because we put a lot of money in it, where should we put the money?
Bill Baldwin, editor: Section 529 plans are the plans where you can --
David Asman: Section 529 refers to the tax code.
Bill Baldwin: Right. You put your money away for tax-free, compounding as long as you use the money for college tuition. Great. But there are 529 plans, and there are 529 plans. New York State has one of the best (http://www.nysaves.org). It’s run by a super-efficient, very well run company called TIAA-CREF. It’s going to be handed over, this is news, just happened two days ago, to another very efficient, well-run company.
David Asman: By the way, we have to emphasize that you don’t have to live in New York to take advantage of the New York plan, right?
Bill Baldwin: The New York plan gives you a tax deduction if you live in New York, but you can live anywhere and get great, low-cost investment returns.
David Asman: But, do you have to go to a New York college for this?
Bill Baldwin: No you don’t.
David Asman: So you don’t have to live in New York, you don’t have to go to a New York college to take advantage of a plan that can save you how much money?