For 25 years, Steven Halpern, editor of TheStockAdvisors.com, has surveyed the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is one of 100+ ideas in the Best Stocks for 2008 report.
"My favorite speculative idea for 2008 is Washington Mutual (NYSE: WM)," says Gordon Pape, editor of Internet Wealth Builder.
"Washington Mutual has been absolutely clobbered by the subprime meltdown. For investors who believe in buying when there is blood in the streets, this looks like a great, if aggressive, opportunity.
"This Seattle-based savings and loan has been in business for more than a century. It has a market cap of $16.7 billion and is a member of the S&P 500. It has cash reserves of $18 billion ($20.89 per share), so it appears to be in good financial shape.
"Despite this, WM's stock price has tumbled 60% over the past 12 months, with most of the decline taking place since the first of October. At current levels, the stock is trading below its most recently stated book value, so the company could be a takeover target.
"The company reported a 72% drop in third-quarter profits after booking a $967 million provision for loan losses. However, WM maintained its quarterly dividend of 56 cents a share, which means that it is yielding an incredible 11.7% at the current price. Either there is a lot more bad news to come here or investors have grossly overreacted.
"Of course, there is a possibility the company could go bankrupt but, somehow, I doubt it. This looks like a great opportunity for investors who are willing to take a risk."
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Reader Comments (Page 1 of 1)
12-24-2007 @ 11:20AM
Mattrix said...
Wait a minute, that's not right. WaMu slashed its dividend by 73%. They're only paying $0.15/share now. Are you quoting Mr. Pape from earlier this month?
I'm tracking WaMu too, I think it might be a great stock to own. I agree with everything in the article, except the 12% dividend yield.
12-24-2007 @ 11:41AM
robert said...
how long ago was it when Citicorp and Chase were trading in single digits on the Big Board?
12-24-2007 @ 2:05PM
Peter Blum said...
the blog posted on 12/24/07 states:
"The company reported a 72% drop in third-quarter profits after booking a $967 million provision for loan losses. However, WM maintained its quarterly dividend of 56 cents a share, which means that it is yielding an incredible 11.7% at the current price. Either there is a lot more bad news to come here or investors have grossly overreacted."
This is just outdated mumbo-jumbo. So what if WM maintained its third quarter dividend despite loan losses. It has since slashed its dividend to .15/quarter, which means that it is yielding about 4.3% at the current price ($14.00).
12-24-2007 @ 3:54PM
steve S said...
Like the other email comments, I'm confused by the non current comments to the dividend. I would like to know if the authors opinion was based on the dividend amount and what is his opinion with the dividend being reduced. Also, WM issued convertible debt of approximately $3 billion to gain additional equity to offset prospective loss reserves. In addition, their quarterly provision was substantially increased over the $900 million. What is the opinion with the corrected facts?
12-24-2007 @ 11:44PM
Mr. noitall said...
I also read that WaMu slashed it's dividend to .15 per share. Explain yourself, Halpern! You might have made a mistake here. Do some more research & give us the facts.
12-26-2007 @ 5:28AM
SmbdyPaidSteven said...
Interesting !! WaMu despite having $21 cash against each share needed to sell $3 billion in preferred stock. The company cut the dividend to $0.15 and when you subtract all the liabilities against the common WaMu barely fetches near $17 or so. This doesn't even account for the $3 billion preferred. Also wait for the balance sheet to come out in January. This analysis is at best flawed :-)
12-27-2007 @ 7:39PM
John said...
WaMu may end up being sued by the investors that had bought cdo's from WM after Fed investigation initiated by New Yprk City.
12-28-2007 @ 6:51AM
keyser said...
Wamu did cut it's dividends by 73%. Do your research, it was all over the news. And Pape charges money for advice on his website? pffft what a joke.