This is primarily based on speculation for the future, not on what is actually happening today. Quality growing companies like Merck, McDonald's and PepsiCo are appropriately the core of WOW's portfolio as they well should be for the typical investment club organized for long-term success. In today's circumstance, they are highly priced and at some point should probably be sold in spite of the excellence of their business. Our analysis puts PepsiCo in this category, although in WOW's situation it would have to subtract a high income tax penalty if they were to sell PepsiCo. Starting and Running a Profitable Investment Club does not advise selling high quality, growing companies just because their price is high.
Chances are the company has simply reached a new plateau, with many more to come.
It pays to be slow to sell such an excellent company as PepsiCo when Uncle Sam is going to immediately reach in for his percentage of the profits. If an investor pays a 28 percent tax on the capital gain, then he has to find a stock that is just as good and that much cheaper just to break even. I don't think it will be a great winner. Neorx has shriveled to half its purchase price. It also was probably not bought on the basis of a NAIC analysis of results.