Each year Steven Halpern, editor of TheStockAdvisors.com, surveys the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is part of his 24th annual Top Stocks Report.
Park National Corp. (ASE: PRK) is the favorite conservative investment for 2007 from small bank stock specialist Doug Hughes.
The editor of Banknewsletter.com notes, "Park National is a bank holding company, engaged in the commercial banking and trust business in Ohio with over 1,800 employees and 133 offices. Total assets over $5.4 billion, loans over $3.2 billion, and deposits over $3.7 billon as of 3/31/06.
"The stock has been selling off and is currently at the low for the year, something we like, no news, just a big sell off in the shares, while they may have been over-valued at $140, at $93 it is a buy. Book value is almost $40 a share and with net interest margins at 4.37% and a return on average assets at 1.78%, very strong, they are simply worth three times book+ in a deal.
"Insiders own a ton, they will earn $7 in 2007, so a P/E of 13 is very fair for the quality of the franchise. The bank has been around for 100 years, their asset quality is among the best ,and reserves at over 2.10% very strong. The big cash dividend is also nice.
"Growth seems to be the issue on this one, so maybe they will sell sooner than later. We see tremendous consolidation in the industry in the next few years. They have a footprint someone would want, and management is very frank and for shareholders period. They have only 14 million shares outstanding but it trades plenty, just use limit prices please on down days. It does follow the market somewhat.
"Even just a buyback or a stock/split would move this one back over $105 in a few days. Look for a 10% return for many years to come from these levels, or 30%+ the day it is sold. Buy all you can under $90 and accumulate heavily under $93.50."
To see Doug's favorite speculative bank stock for 2007, click here.
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