John Dobosz is an industry-leading income specialist. Here, the editor of Forbes Dividend Investor, reviews two recent buy recommendations — both of which have seen buying activity from multiple insiders.
Univest Corporation of Pennsylvania (UVSP) is a small cap ($425 million market value) regional bank. Founded in 1973, the holding company operates 32 bank branches in the Pennsylvania counties of Bucks, Montgomery, Chester, and Lehigh.
Net interest income this year is expected to rise 5.1% to $177.8 million. Univest has an unbroken history of paying quarterly dividends since March 2001, and it has never reduced the amount paid, even during the 2008-2009 financial crisis. The $0.20 per share quarterly dividend gives the stock a yield of 5.8%.
On valuation, Univest sports discounts across the board to five-year average price multiples: price/sales, price/earnings, price/book value, price/cash flow, and EV/EBITDA. Univest trades 50% below its average price-to-sales multiple, and 47% below its average price-to-book ratio.
Multiple company directors were buyers of UVSP stock from February through May at prices higher than the stock's recent $14.54 close.
Philadelphia, Pa.-based Carpenter Technology (CRS) manufactures, fabricates, and distributes specialty metals like titanium, nickel, and cobalt, as well as special alloys engineered for customers in industries that include aerospace and defense, industrial machinery, medical, energy, and consumer durable goods.
More than two-thirds (68%) of business comes from the United States, and 16% comes from Europe. Revenue for the year ended June 30, 2020 is expected to decline 8.1% to $2.19 billion, but the stock’s current 53% discount to its five-year average price-sales ratio appears to provide an adequate markdown.
Carpenter has been paying dividends since 1985, and at the current quarterly rate of $0.20 per share, the dividend gives the stock a yield of 3.7%. Free cash flow per share of $1.58 per share over the past 12 months comfortably covers $0.80 in annual dividends.
In March top officers and directors were avid buyers of the stock both above and below the stock's recent $22.59 closing price.
