With high school and college graduations, it’s gifting season. If you don’t want to give cash that can be quickly squandered, consider giving stock.

“Stocks are a tremendous gift for a young graduate. Unlike a check or a new car, your gift grows over time,” says Jeff Reeves, analyst and executive editor of InvestorPlace.com.

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A gift of $10,000 in stock to an 18-year-old at graduation could be worth more than $16,000 (assuming a 5 percent annual return) at age 28, when he or she needs a down payment on a first home, says Reeves.

A smaller gift of stock can be a grand idea for a graduate, too. Here’s how to do it right.

“Give shares of companies that a young person is familiar with or uses their products and services — Starbucks, Nike, Apple, Netflix, Google. These companies are cool for them to own because they know what the business is,” says Dave Geibel, a wealth advisor at Girard Partners in King of Prussia, Pennsylvania.

Be aware of tax considerations: The gift tax limit is $14,000 per person for 2016. “Say you gift $15,000, that $1,000 over becomes a taxable gift. You’ll have to fill out a gift tax form. However, you don’t pay tax on it; instead it reduces the amount you can pass on [tax free] to the next generation by $1,000,” explains Denis Horrigan, partner with Connecticut Wealth Management in Farmington.

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Remember, warns Mike Keller, a financial consultant with The Provident Bank in Matawan, New Jersey, the recipient keeps the giver’s cost basis — the price paid for the stock initially. So if you are gifting highly appreciated stock (stock with a low cost basis relative to today’s price), “when the stock is sold, the tax bill could be huge.”