This week, GlaxoSmithKline
Half of the sale was a buyback by Quest at $54.30, and the other half went in a public offering at $56.25. Shares are currently trading north of $58.
Is that a sign that you should sell shares, too? That depends; do you have somewhere else to invest the proceeds?
Glaxo certainly does. Its shares are fairly cheap, and a buyback could help its shareholders more than holding on to the shares of Quest.
I'm reminded of this video of Motley Fool co-founder David Gardner a few years ago talking about his sell signal. Essentially he sells when he finds a better investment than the one he's in right now. That might mean selling a winner or a loser, but the important thing is that he's always chasing higher returns.
Are there better returns out there than Quest? Maybe, but the risk-reward profile doesn't look too shabby at this point either. The company trades at 14.5 times earnings, a little cheaper than Laboratory Corporation of America
Lab Corp. has been growing faster, but that's mostly because it stole UnitedHealth Group's
Follow Glaxo's lead if you have a better place to invest, but Quest still looks like a good long-term bet to me.
Buffett thinks this "picks and shovels" health-care company should profit, regardless of Congress' health-care reforms.
Quest Diagnostics and UnitedHealth are Motley Fool Inside Value recommendations. Lab Corp. and UnitedHealth are Motley Fool Stock Advisor picks. GlaxoSmithKline is a Motley Fool Global Gains recommendation. Motley Fool Options has recommended a diagonal call position on UnitedHealth Group. The Fool owns shares of Bio-Reference Laboratories, GlaxoSmithKline, and UnitedHealth. Motley Fool Alpha owns shares of Lab Corp. and Quest Diagnostics. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.