Should I buy company stock?
 

My company offers stock at a discount to employees. Do you guys that know the market think this would be a good investment?

SRCL on the NYSE. http://finance.aol.com/quotes/stericycle-inc/srcl/nas

Thanks.

Is it an ESPP? If so, max it out then flip it as soon as you can.

Just don't put all your eggs in one basket...diversify. That's basic, but I have no idea of your age, how close your are to retirement, your tolerance for risk. Many things factor into asset allocation decisions.

If it's an ESPP (employee stock purchase plan) you may not even need to consider the fundamentals of the stock.

If it offers the purchase at a discount, often the purchase price is the discounted price of the stock at the lower of two prices. The price at the beginning of the purchase period or the price at the end of the purchase period.

Bottom line is that you get at least your discount (and maybe more if the stock price goes up) at the end of the purchase period. If you not into the risk of owning the stock you can just unload it immediately after purchase.

If your discount is 15% you've made at least a 15% profit.

Word. I do this twice a year to the max then flip. Where else can you get a guaranteed 15% return?

Good investment, in general. Just diversify. Remember if the stock price goes down, you're in the same boat regarding employment.

Be careful right now. The market as a whole is pretty overvalued. Your company's stock may or may not be, but just something to be wary of. I think a significant correction is coming soon on the order of 10%-15% marketwide.

Buy and flip, been doing that for 10 years. Free money.

If you can, there's little downside. Although I've heard of companies imposing restrictions on when you can sell (i.e. the stock is held in a company-managed "account" and is untouchable for a period of time before it really becomes "yours" and you're free to move it to your own portfolio, buy or sell it, etc.)

If you have a 0-day limit (meaning it's yours free and clear right away) I'd be all over it like a bum on a ham sandwich. If it has limitations or a time period where it has to "vest" in your account I'd seriously weigh the risk based on your own company's underlying performance factors, valuation and susceptibility to movements of the market as a whole (or sectors of it).

I'd be VERY surprised if ythey were just selling you stock free and clear with no strings or vesting period at 15% off in this economy. If they are, it's almost a signal that they're desperate for cash infusions.

Looks like your CFO and COO have been dumpinig some big blocks:

SRCL: STERICYCLE INC Insider Transactions

Your questions needs to be rephrased as this: Do you think it's a good idea for me to buy stock at a discount from the market price? Think about that for a minute.

The answer is yes. You should buy all they let you buy. How long you keep it depends on your overall investment portfolio, but there is no reason not to buy. Make sure you reinvest dividends. My wife's company offers the same thing. We bit down hard when she started and maxed the investment on a payroll deduction basis with dividends reinvested. I can't tell you what a difference that block of stock has made in our lives.

15% is the usual number for an employee discount. It's what my wife gets. Unless the program just started, it doesn't sound like a plot to pump up the stock or get more capital reinvestment.

Buy and flip huh? You dont get to flip it the next day, its restricted and then you're holding stock for the restricted period. Sorry no such thing as free money.

My ex wife's company had this plan. It's a sweet deal and it adds up. Do it.

Just get out of it as soon as you can so all your eggs aren't in one basket for the long term.

All true, but consider you're already heavily "invested" in the company you work for since that's where your paycheck comes from ;)

Thanks for the replies.

I will be eligible in February so I will do payroll deduction and add this to our other investments.

My old company was not publicly traded so this is new to me.

It looks like our company executives are enjoying this benefit.:D

[QUOTE=Martin Smith;5114301]All true, but consider you're already heavily "invested" in the company you work for since that's where your paycheck comes from ;)[/QUOTE

To manage the ballance of risk regarding having your portfolio where your employer is, all you have to do is buy all the discounted stock you can get your hands on, do payroll deduction so you get used to it and it doesn't hurt after a while, and put all of your regular savings and investments into other investments that don't involve the employer. Pretend like your take home after the stock purchase is your real take home and invest the proper portion of that in noncompany investments. We just put our other savings into the various indexes and stock funds that are out there. Our mix is weighted toward the employer, but it's not out of whack and we could sell the older stock with the click of a mouse if the company starts looking a bit tired.

Monza,
Good catch! What could be behind those year end sales?
(not meaning to get off-topic)

Absolutely do it...

Even if you can't immediately "flip" the discounted shares, you can hedge your position by shorting the shares in another account, or using options.