My family has been talking about stocks a lot while I’ve been home and I got showcase my little portfolio superstar a little more than usual.
What my folks and my brother wanted to know was – how did I pick this stock?
Don’t get me wrong, I’m all for maxing out retirement accounts and I think the wisest stock decisions are index funds and mutual funds and anything that spreads out the risk a little more than a single stock. Those have also shown to be very safe bets for long term investing over the years.
If you like spending six to eight hours per week working on investments do [buy individual stocks]. If you don’t, then dollar-cost average into index funds. – Warren Buffett
That being said, with some careful studying, you can make very educated guesses about individual stocks as well.
One piece of advice I read early on in my financial career was to invest in what you know.
Never invest in a business you cannot understand. – Warren Buffet
Because of that, I ‘ve always kept half an eye on cruise lines. However, I also think, to an extent, almost everyone in the world understands a little bit about death.
Death is a crazy money making business.
It’s something every single person will have expenses related to – whether it’s a traditional burial, a green one or even something very simple like a poor person’s state paid cremation. At the end of the day, dead bodies will always need to be disposed of – for me, that felt like a somewhat secure company to invest in.
And, I realize this is maybe a little gauche, there are a lot of baby boomers. And they’re getting old (and someday I will too).
So I Googled death stocks and after reading up on several, I narrowed it down to two that seemed particularly promising. Carriage Services and Hillenbrand.
Carriage Services owned more than 1,000 funeral homes and a few hundred cemeteries.
Hillenbrand is focused more on the business of death. While they own some funeral homes, they primarily manufacture coffins and make the machines used in funeral homes. Some of the information I read about them in news articles on the web right before buying indicated they were considering buying crematoriums to their company as well.
At the end of the day, Carriage Services seemed (at the time, circa 2014) a little overpriced. I also didn’t like that such a large amount of their company is in cemeteries, which are limited by a finite nature amount of land. The fact that Hillenbrand seemed like they wanted to expand in such a logical manner sounded better to me.
I bought HI at $29.35 a share a few weeks later they did buy a company that owned a bunch of crematoriums. Since then, the shares have been quietly chugging along and my initial investment of $1,000 turned into $2,000 when I added another grand two years later. My initial investment of $2,088.79 has grown 27.24% ($568.98) over 2+ years.
While I realize the growth probably won’t stay quite so awesome forever, this is definitely a company providing a service that we’ll always need, that has done a terrific job of adapting to the times since their first casket in 1884 and seems to be lead by some really solid management.