Several stories have been written lately recommending large bank stocks like Citigroup (NYSE: C), Bank of America Corp (NYSE: BAC), JP Morgan Chase & Co (NYSE: JPM), and Wells Fargo & Co. (NYSE: WFC); all great companies, all good investments paying nice dividends. However, when I search for value I am still finding a preference for the smaller banks with greater organic growth opportunities and the ever-present potential of being a take-over target.
In my last few stock screens Popular Inc (NYSE: BPOP) popped up and I did not give it much thought since we are overweighted in financial stocks, but last week I took a deeper look at BPOP, and yesterday started writing this story. This morning a limit order came through so I must disclose that I am now writing about a stock I bought at $17and as a shareholder have a financial interest in it, not just as a writer. But then I rarely recommend investors consider acquiring a stock that I would not buy myself.
The following metrics will give you a brief overview of the value from a trailing 12-month perspective. The data comes from AOL Money & Finance. Popular is the bank holding company for Banco Popular de Puerto Rico, the largest bank on the island, with some 200 branches. On the U.S. mainland, subsidiary Banco Popular North America serves growing Hispanic communities in six states through more than 140 branches.
- Price-to-earnings P/E: 13.72 (TTM)
- Price-to-sales P/S: 1.21 (TTM) VERY LOW
- Price-to-book P/B: 1.34 (MRQ): VERY LOW
- Price-to-cash-flow P/CF: 6.37 (TTM): LOW
- Return-on-equity ROE: 10.01 (TTM)
- Long Term Debt-to-Equity (MRQ) 5.4
- Dividend Yield 3.75%: HIGH
I like the growth opportunities in North America for Popular. I like that company Directors are buying stock and that there have been no sales in the last two years. I think BPOP presents opportunities to integrate itself into the many growing Hispanic communities around the country. I like the fact that it makes money on higher yielding consumer and business loans and are not exposed to questionable mortgage loans. Popular is near a two year low and the financial sector has been drifting for some time. My investment approach targets stocks that are out of favor temporarily for reasons that reflect macro conditions or internal situations that I believe will be corrected. So take a look at Popular and let me know what you think.
Those of you who are new to BloggingStocks can check out my other stories and read Chasing Value or Serious Money to find more potential opportunities and verify my track record as well. Disclosure: I own shares in BPOP, as of this writing.
Sheldon Liber is the CEO of a small private investment company and the vice president for design and research at an architecture & planning firm. Check out his other posts for BloggingStocks here.
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