Game on Timeshare Regrets Valuation Matters

Ask the Fool Valuation Matters How does one determine a Qstock’s real value? — C.F., Chubbuck, Idaho You’re right to note that a Astock’s current price is not Fool’s School those issues. (A part-time job for a My Dumbest Investment The Motley Fool Take necessarily equal to its intrinsic few years can also generate welcome (sometimes called fair) value. Over- income.) Give some thought to jobs or Timeshare Regrets Game On enthusiastic investors may have Improve Your activities you’d enjoy. bid the price up into overvalued Retirement — Take a little time to learn about My dumbest investment was buying The stock of video game titan territory, or it may be languishing at Social Security, and think about when a vacation timeshare. — N.E., online Activision Blizzard (Nasdaq: ATVI) an undervalued level due to a lack Starting Now you’ll want to start collecting your The Fool Responds: While there has soared some 73% since “Call of of investor interest or confidence. benefits. You can start as early as are certainly happy timeshare own- Duty: Mobile” launched in October Odds are, you’re looking forward 2019. But over the four years through Seeking and investing in under- to retirement and are hoping it will be age 62 and as late as 70; the size of ers out there, there are also many, valued high-quality companies is a like you, who regret their purchases. the end of 2020, Activision Blizzard’s low-stress and enjoyable. No matter your benefit checks will depend on smart strategy. Buying a timeshare involves revenue increased at a compound when you start. (Remember that while annual rate of only 5.2%. It may not Determining a stock’s fair value your age, there are probably some forking over a lump sum, usually steps you can take now to improve starting earlier means smaller checks, look like a growth stock right now, is easier said than done, though, you’ll also get more of them.) Learn with annual maintenance fees also your future financial security. required, in exchange for partial but change is afoot. and skilled analysts will often arrive more at SSA.gov. The company is benefiting from at different estimates. Some will For starters: Have a plan, and be ownership in (or just the right to use) sure to follow it. Try to determine Don’t neglect health care in your a property or group of properties. a shift to digital distribution (such use complicated “discounted cash as subscriptions and in-game sales): how much money you’ll need to planning, as there’s a good chance (Sometimes it’s for a specific unit flow” analysis, estimating future it will cost you a lot. Fidelity Invest- Digital content doesn’t require manu- free cash flows and assigning them retire with, and how you’ll amass in a property; often it’s not.) Main- ments has estimated that an average tenance fees are charged whether or facturing, packaging or distribution, present values based on chosen that. (Investing regularly in a low-fee and therefore boosts profit margins. broad-market index fund over many couple retiring at age 65 this year not you use your unit(s), and they discount rates. (In other words, this tend to rise over time. Your share New content releases will be another will still be an educated guess.) years can help you build a big will spend a total of $300,000 out growth driver for Activision Blizzard, of pocket on health care throughout entitles you to use the property or Most of us individual investors nest egg.) properties for a certain length of along with growing user engagement favor simpler ways to estimate a Don’t be reluctant to consult a their retirement. and increasing revenue per user. The more you think about and plan time and frequency — often one stock’s valuation. The price-to- fee-only financial planning profes- week per year. Some timeshares Two of Activision Blizzard’s earnings (P/E) ratio, which divides sional: Good ones know much more for your retirement, the better it’s allow you to rent or sell your share, top franchises — “Call of Duty: the current stock price by the last about retirement issues than you do, likely to be. You might look into buy- while others forbid that. Warzone” and “World of Warcraft” 12 months of earnings per share, ing an annuity, which can deliver reli- The Federal Trade Commission — are among the most-watched and they can save you or earn you games on Amazon’s game-streaming is one of many useful tools: The much more than they cost. (You can able income for the rest of your life. A website (FTC.gov) has a page of lower the P/E ratio, the more attrac- reverse mortgage, while not right for warnings titled “Timeshares, Vaca- platform, Twitch; average monthly find a fee-only adviser near you at concurrent viewers nearly doubled tive the price. (Though it’s impor- NAPFA.org.) many people, may serve you well. tion Clubs and Related Scams.” It tant to remember that P/E ratios notes that sales pitches for time- year-over-year in the last quarter, Many people find themselves bored You can get more retirement advice to 2.9 million. The company’s vary by industry.) shares — the industry is known for or lonely in retirement. A part-time by trying our “Rule Your Retirement” other properties include “Candy Don’t rely on any one valuation service at Fool.com/services. very pushy salespeople — may pres- job or a social pastime can address ent them as investments, but they’re Crush,” “Overwatch,” “Hearthstone” or stock assessment method alone, and “Diablo.” though. Dig deeply into any com- not investments. Think of them only as vacation plans, and know that Activision Blizzard boasts leading pany you’re considering for your franchises in an industry that’s been portfolio. they often fall in value over time. Name That Company It can be very hard to get rid of a growing for decades. It has a deep *** timeshare — there’s even a niche pipeline of growth initiatives within I trace my roots back to its most popular franchises. Consider How large are “large-cap” industry of companies specializing Cincinnati in 1857, when I was in extracting people from them, adding some shares to your long-term Qcompanies. and how small portfolio. (The Motley Fool owns are “small-cap” ones? — P.J., launched as a manufacturer of though some of them are scams, safes and vaults for banks. My too. Do deep research before buying shares of and has recommended Tarentum, Pennsylvania into a timeshare. Activision Blizzard.) There’s no single definition, business got a boost after the Abut here’s a common one: Great Chicago Fire of 1871, when Consider companies with market all 878 of my safes and vaults LAST WEEK’S TRIVIA ANSWER capitalizations below $300 million in destroyed buildings survived I trace my roots back to 1911, when two guys patented a wringer to be micro-caps; between $300 intact. I later developed manganese washing machine driven by an electric motor and founded me. I million and $2 billion, small-caps; steel doors that could resist dynamite developed a gasoline-powered washer for rural customers in 1915. between $2 billion and $10 billion, During World War II, I made millions of items for the war effort mid-caps; between $10 billion and explosions. Today, based in North before returning to major home appliances. In the 1950s, I acquired $200 billion, large-caps; and above Canton, Ohio, I “automate, digitize and refrigerator, air conditioning and kitchen-range businesses. I $200 billion, mega-caps. transform the way people bank and acquired Maytag in 2006. Today, based in Benton Harbor, Michi- For some current examples, gan, I boast roughly $20 billion in annual sales and employ around shop.” I serve the world’s top 100 finan- 78,000 workers. My brands include KitchenAid, Maytag, Hotpoint, Wendy’s is a mid-cap, while Star- cial companies and top 25 retailers, offer- bucks is a large-cap and Pfizer a JennAir, Amana and Yummly. Who am I? (Answer: Whirlpool) mega-cap. ing ATMs, self-service checkout machines, software, services and more. Who am I? Want to Invest? Email us at [email protected], and we’ll Want more information about stocks? send you some tips to start investing. Sorry, we can’t provide Send us an email to [email protected]. Think you know the answer? We’ll announce it in next week’s edition. individual financial advice.