Bank Guru's Takeover Plays
11/22/2016 9:00 am EST
Many banks have gone 20% or as a result of the Trump win. What will happen next?, asks regional bank stock expert Doug Hughes, editor of Bank Newsletter.
In predict a wave of takeovers as many banks can now use their strong stock price to do deals now.
In play now is Oppenheimer (OPY), and investment bank and broker-dealer — offering asset management and investment advisory service.
As interest rates go up, the company will make a ton more money. In addition, Oppenheimer offers a 3% cash dividend that will go up this year and next.
This one trades way under their tangible book value of $25 and is worth an easy $35 a share in a deal — or more than 100% upside from these levels.
The stock offers the best risk reward in the current market and is a total sleeper now with rates up.
The firm also bought back over 300,000 shares of their stock during the last quarter and will announce another buyback if they are not sold.
Next, I would consider Avid Bank Holdings (AVBH), a small Palto Alto, California commercial bank growing like crazy, with almost no bad loans, and a price-to-earnings ratio of only 10.
Their book value is almost $13.00 a share worth at least 2 times book or $26.00 a share, and also almost no downside risk has not moved at all in this crazy bank move this week.
It seems only the large more liquid names have moved during the recent rally in financials and the smaller names are just doing nothing.
Both Oppenheimer and Avid Bank Holdings trade plenty to get a nice position. Again, the stocks are as safe as you can get. Buy both of these today use limits and make them top holdings.
By Doug Hughes, Editor of Bank Newsletter