Take This TAXI to Profit

TheStreet.com

NEW YORK (TheStreet) -- I love to receive dividends, but I also like capital appreciation along with them. Bonds have obviously delivered some hefty capital gains over the years as interest rates have come down, down, down.

U.S. Treasuries have handily beaten the S&P 500 over the last three, five and 10 years. But, as you can see they have badly trailed the market over the last 12 months.

Data from Best Stocks Now App

Investing is obviously all about the future. Do you see a new bond bull market emerging?

I don't.

My income portfolios are full of various dividend-paying equities at the current time. REITs, Master Limited Partnerships and other dividend payers continue to kick out much bigger returns than the fixed- income alternatives.

So far this year, the Income & Growth portfolio I publish in my newsletter every week is up 12.5%. (Click here to receive a complimentary trial to my newsletter.)

Here is just one bond alternative that I own right now:

Medallion Financial is a stock I've recently purchased. I've watched it over the years and it has always baffled me because it's a very unique stock.

TAXI originates, acquires and services loans that finance taxi cab medallions and other commercial businesses.


Give the company a call and start your own taxi cab business! It is headquartered in New York City, the home of taxi cabs.

If you are interested in dividends and capital appreciation instead, take a look at the performance of the stock over the years.

Data from Best Stocks Now App

TAXI currently pays a dividend yield of 6%. I love that song "Taxi" by Harry Chapin, "taking tips and getting stoned!" I think every guy in America knows punch lines from this song. When Chapin performed it on "The Tonight Show," he was invited back the next night for an encore. This was the first time that this happened in the show's history.

Over the last 10 years, TAXI has delivered an annual average return of 19% per year to investors. It's almost quadrupled the returns of the market over the last 10 years!

In the last five years, TAXI has delivered an average of 21.4% per year to its investors; over the last three years, 32.4%; and over the last 12 months, TAXI is up 49.8% in comparison to the market, which is only up 19%.

TAXI passes my performance and momentum test.

While I like performance and momentum, I also require a decent valuation. I don't like to pay $200 for a taxi ride to the airport. Let's have a look at how Medallion Financial fares currently.

Data from Best Stocks Now App

The stock is currently trading at 12.5 times forward EPS estimates. The average stock in my database is trading at 17.5 times forward earnings. While not cheap, the stock is not expensive either. Don't forget it currently sports a 6% dividend yield.


The last piece of my stock selection puzzle is the visual one -- the stock chart. Let's have a look...

I like a healthy stock chart. When I look at TAXI's stock chart, what do I see? I see a chart that's getting high and hitting new highs and not getting stoned!

Medallion Financial is a small-cap company worth $304 million -- this makes TAXI a small-cap dividend stock. Small-cap dividend is currently one of the top-ranked asset classes in the market.

Data from Best Stocks Now App

When I consider performance, momentum, value and the stock chart, TAXI comes in #95 overall out of the 3,334 stocks that I monitor. Income and Growth clients of Gunderson Capital Management are long the stock.

Data from Best Stocks Now App

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

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