Lately I’ve Been Reading

Matthew McConaughey’s book Greenlights is a collection of diary entries, stories and journal entries that he has written through life. He is not a hero by any means but he pulled himself up and spent a large portion of his life trying to impress and live up to his perceived view of how his father perceived him. He is doing okay.

He did get me thinking about life and where we go from here. What if there is no here?

Neptune Society

I became tired of reading Matthew, so on a particularly morbid Sunday afternoon a few weeks ago I remembered that Cheryl and I had planned to collect information and preplan our funerals. Once in a while Cheryl thinks about this as her PD takes her occasionally down a dark road. She has expressed interest in cremation, so on this Sunday I poked “cremation cost + cincinnati” into Google and the Neptune Society popped up as the first or second hit. So, that sent me down the rabbit hole of death, dying, funeral cost, yada, yada, yada.

I filled out their form thinking I would be buried in email about cemeteries and crematoriums. Not so simple, just like senior living facilities and “aplaceformom” I started getting calls from them. Eventually I mistakenly answered their call and found out some interesting info.

Their parent company is Service Corporation International (NYSE: SCI). I am interested in stocks so I used our stock club’s analysis to check them out.

It sounds morbid but death is up. And as Jim Morrison of the Doors once said, “No one here gets out alive!” He may have been drunk at the time but truer words were never spoken.

SCI

Summary: [from Reuters] Service Corporation International is a provider of death-care products and services, with a network of funeral service locations and cemeteries. The Company’s segments include Funeral, Cemetery and Corporate. It conducts both funeral and cemetery operations in the United States and Canada. As of December 31, 2016, it operated 1,502 funeral service locations and 470 cemeteries, including 281 funeral service/cemetery combination locations, which are geographically diversified across 45 states, eight Canadian provinces, the District of Columbia, and Puerto Rico. It offers various brands, such as Dignity Memorial, Dignity Planning, National Cremation Society, Advantage Funeral and Cremation Services, and Funeraria del Angel. Its funeral service and cemetery operations consist of funeral service locations, cemeteries, funeral service/cemetery combination locations, crematoria, and related businesses. It sells cemetery property, and funeral and cemetery merchandise and services.

Various Opinions: CFRA recommends BUY (5/13/2021); Research Team recommends HOLD; Reliable Research – We do not recommend investors buy SCI; Ford Equity Research – We project that SCI will perform in line with the market over the next 6 to 12 months; Barchart Technical Opinion – Strong BUY; Zacks – Add to Portfolio (2-buy)

Few want to think about it but death seems to be an expanding market. Last year was a good one for sales and 2021 continues to be one. Regardless of the pandemic pandemonium and which side of the mask you are on, a lot of people died last year. From SCI’s first quarter guidance announcement:

UPDATED OUTLOOK FOR 2021 – Today we are reporting earnings per share of $1.33 and net cash provided by operating activities of $298 million for the quarter. The $0.88 growth in earnings per share in the quarter was primarily driven by increased comparable preneed cemetery sales production and continued elevated COVID-19 mortality, which resulted in an increase in both funeral services performed and burials in our cemeteries. Comparable preneed cemetery sales production grew $130 million, or 67%, during the quarter driven by an increase in sales velocity, sales averages, and large sales activity. Net cash provided by operating activities grew approximately $118 million over the prior year quarter, primarily due to increased operating profit.

Based on our first quarter results, we are raising the midpoint of our full year adjusted earnings per share guidance fifteen cents to $2.85 and the midpoint of our adjusted operating cash flow guidance to $687.5 million. Our long-term earnings growth framework remains in place, we will maintain focus on our core strategies of growing revenue by remaining relevant to our client families, leveraging our scale, and maximizing our capital deployment opportunities in a disciplined and balanced manner.

That was probably more business information than you intended to read. The stock club analysis reports SCI as a “buy”. Although it will not be a shining winner like a bunch of tech stocks, it will probably double in value over the next 5-ish years and along the way produce a 1.5% dividend per share.

Death is on the rise in America.

But wait there’s more! (morbid thoughts that is) Cremation is less expensive that other forms of disposal. Urns are available on Amazon for less than $50.

Carpe Diem (or at least the afternoon)

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