Last week’s answer

I was founded by two fellows as a small machine shop in Baltimore in 1910. Today I make and sell power tools and accessories, hardware and home improvement products, and technology-based fastening systems in more than 100 nations. My brand names include DEWALT, Momentum Laser, Emglo, Kwikset, Price Pfister, Geo, Bach, Emhart Teknologies, HeliCoil, Gripco and Tucker. My power tools division generates nearly three-quarters of my sales, while hardware and home improvement contribute nearly 20 percent. In 2003, I took in $4.5 billion, and my net profit was nearly $300 million. Who am I? (Answer: Black & Decker)

Overlooked tax breaks

Here are some commonly overlooked tax credits and deductions that can help you reduce your tax bill.

• If you’re a teacher or school administrator, you might qualify for a $250 deduction for qualified classroom supplies that you bought.
• If you make a contribution to virtually any retirement account (e.g., IRA, 401(k), 403(b), 457), you may be eligible for a retirement savings contribution credit. It’s limited to the lower level of the income spectrum and can be found on line 48 of Form 1040 or line 32 of Form 1040A. (Remember, you have until April 15, 2004, to make a 2003 contribution to your IRA. Learn more at www.fool.com/ira/ira.htm.)
• If you’re self-employed and pay qualified health-insurance premiums, you may be eligible to deduct 100 percent of them.
• If you paid some interest on student loans in 2003, you may be able to deduct it, without even itemizing deductions.
• If you paid points on a new mortgage, you may be able to deduct that amount. Points paid on a refinancing are generally deductible on a pro-rata basis over the life of the loan.
• If you’re taking qualified college courses, it’s possible that you can claim a deduction for tuition and fees.
• If you’re adopting a child, you may be able to take a tax credit of as much as a $10,000 for qualified adoption expenses.
• If you have some shares of worthless stock on your hands, by selling them to a nonrelated person (perhaps for just a dollar) you may reap a deduction in the year of sale.
• If you use your car for charitable purposes, you can deduct 14 cents per mile for all qualified charitable travel. Not only that, you can deduct out-of-pocket expenses when you’re serving a qualified organization.
• If you use your auto for medical travel, such as to and from your doctor or dentist, you may be able to deduct 12 cents per mile. The cost of travel and lodging related to medical treatment can also be deductible.

Learn more at www.irs.gov and www.fool.com/taxes.

Peet’s perks up

Peet’s Coffee & Tea (Nasdaq: PEET) announced strong fourth-quarter earnings last month, with total revenues up 15 percent and grocery store sales up 115 percent over 2002’s numbers.

Peet’s coffee is now available in more than 2,700 grocery stores, roughly 1,000 more than a year ago. These include high-profile outlets, such as Whole Foods Market.

The company plans to repurchase 1 million shares, or 7.7 percent of the shares outstanding. With $43 million in cash and no long-term debt, the company’s balance sheet is in great shape, and management is demonstrating its willingness to return cash to the shareholders.

Three years ago, market leader Starbucks began to move away from its original strategy of investing its own capital in company-owned stores. It now has 1,500 licensed stores in airports, supermarkets and even casinos. While this has fueled rapid growth, it may make it harder to maintain standards of product and service quality. Peet’s, meanwhile, plans to have only company owned and operated stores. It sports 75 locations and wants to open 15 to 20 more in 2004.

With most investors focused on Starbucks, Peet’s is trading at a more attractive valuation. Both stocks trade at seemingly high price-to-earnings (P/E) ratios in the 50s. But with only 75 stores (Starbucks has more than 7,600) and just $115 million in revenues, Peet’s growth potential is arguably much greater than that of Starbucks.

Expensive sprinklers

After Avaya was spun off from Lucent, I ended up with three measly shares of it in my IRA. At the depressed price of just a couple of dollars per share early last year, it would have cost more in commissions to liquidate them than the shares were worth. So I sent $2,000 to my brokerage so I could buy more shares and eventually make it worthwhile (I hoped) to sell them.

Unfortunately, I indicated the wrong year on the contribution and the brokerage sent back my check. Instead of fixing my error and going through with my plans, I spent the money on a landscape job in the back yard. The sprinklers work fine, but Avaya has gone up more than 700 percent since then. They turned out to be very expensive sprinklers. — Thadd Curry, Pinole, Calif.

The Fool Responds: In hindsight, purchasing more Avaya shares would have been smart. We hope that at the time, you studied the company enough to be convinced that it was likely to rise.

Never buy more of a fallen stock just to try to earn some money back.