Although Doug Hughes, Bill Martin and Charles Mizrahi each take differing approaches to stock selection, their latest buys all share several elements. First, while operating in diverse markets, Hawaii, Boston and New York – all three are regional banks.
In addition, all three advisors see their banking bets as value-oriented positions with solid, long-term fundamentals. All three are also buyback and/or takeover plays.
Bill Martin, editor of FindProfit newsletter recommends Valley National Bancorp (NYSE: VLY), which he notes is based in the prime New York City metropolitan banking market.
He states, "VLY has seen its bottom line pressured, primarily due to the flat yield curve. However, there have been no credit issues at very conservatively run VLY, and we don't expect any to develop."
Looking forward, he says, we continue to believe that margins are 'as bad as they will get' for many banks, at least,he notes, for conservative banks without credit challenges such as Valley.
According to Martin, "This means that VLY's bottom-line results should bottom this year and start to improve in 2008."
Meanwhile, he speculatives, "We believe that VLY continues to be a takeout target, as the bank's footprint and under-leveraged balance sheet remains extremely attractive." Further, he states, "With outright ownership of more than 90 buildings in the NYC area, we believe its book value is materially understated."
Doug Hughes, in his Bankstock Newsletter, looks at Century Bancorp (NASDAQ: CNBKA), which he notes is the parent company of Century Bank and Trust Company, which operates 22 branches in the greater Boston area with over $1.5 billion assets and $1.2 in deposits.
He explains, "They just announced a 300,000 share buyback after the stock fell sharply last week. They are in great markets, insiders own a ton and they should sell for a 50% premium one day."
He continues, "They have a book value of almost $20.00 a share and with the bank buying back all that stock this should be the bottom."
Charles Mizrahi, editor of Hidden Values Alert, looks to Bank of Hawaii (NYSE: BOH) as his latest buy. The bank, headquartered in Honolulu, provides a range of financial services and products primarily in Hawaii, Guam and and American Samoa.
The advisor explains, "In addition to being a well-run and efficient bank, BOH pays a 3% dividend yield. In fact, it has increased its dividend every year for the past 10 years. BOH has also purchased close to 40% of its outstanding shares over the past 10 years."
Mizrahi continues, "Return on equity has consistently been over 20% during that same time period. BOH is a well-run bank, and a price of $48 or less per share represents a very good value. If BOH can grow earnings at only 10% per annum (which is 52 percent lower than its five-year average) and maintain a P/E of 12.5, the stock will handsomely reward investors through the next five years."
Each day, Steven Halpern's TheStockAdvisors.com features the latest investment ideas and market commentary from the financial newsletter community.
