Low-risk growth stocks. To many investors, they're the Holy Grail. Now analyst and author Hewitt Heiserman Jr. has come up with a way of zeroing in on them. Even though his new book is called It's Earnings That Count (McGraw-Hill, $27.95), Heiserman ignores standard reported earnings. Instead, he sketches out two alternative income statements: a "defensive" one takes the risk-averse outlook of a commercial banker, while an "enterprising" one comes at a company as a venture capitalist might. Why? "For the same reason that you would get a second or third opinion for a medical situation," he says.
From the defensive view, an investor looks to see how much hard cash a company truly earns; the enterprising income statement, by contrast, credits such intangibles as research spending that can obscure potential for future profits. Together, these twin tests eliminate most companies. But not all. Several stocks lately pass Heiserman's scrutiny. Two to avoid? Allied Waste Industries (AW) and General Motors (GM). Here's some good news for parents banking on financial aid to help pay for college. If you own a Coverdell Education Savings Account or state-sponsored 529 savings account -- both of which allow investments to grow tax-free -- you'll have an easier time qualifying for aid, thanks to a recent clarification of the federal aid formula.
As long as a parent sets up a Coverdell, the U.S. Education Dept. now says it will be treated like a 529 and considered parental property. That's important, since in calculating how much a family can afford to pay for college, the feds count up to 5.64% of a parent's assets, compared with 35% of a student's assets. Before this ruling, the Coverdell -- which caps annual savings at $2,000 per child, vs. total savings of as much as $300,000 in a 529 -- had been deemed student property.
Better still, withdrawals from a Coverdell or 529 will no longer count against you, says K.C. Dempster, director of program development at College Money, a Marlton (N.J.) consulting firm. Before, every dollar you withdrew cut your aid by 50 cents. With college bills escalating, parents can use all the help they can get. Do you like those time-saving kiosks that print out your boarding pass at the airport? Big hotel chains, such as Hilton, Sheraton, and Hyatt, are starting to put them in their lobbies, too. Insert your credit card in the touchscreen console, and up pops your reservation. Follow the prompts, and the kiosk spits out an electronic room key, which you activate by inserting it into the credit-card slot. The whole process takes two minutes tops. You can also use the kiosks to check out -- and have the receipt e-mailed to your office.