Top Picks 2016: Iberia Bank
01/14/2016 7:00 am EST
In his Bank Newsletter, Doug Hughes focuses exclusively on the specialized niche of small and regional banking stocks. Here's his Top Pick for growth investors in 2016.
Iberia Bank (IBKC): Headquartered in Lafayette, LA, this mini powerhouse regional bank went on a buying spree in 2009 from the FDIC for pennies on the dollar, mostly in Florida.
Florida real estate has really come back around 30% just in the past two years in most of their markets and 50% plus from the lows.
People think IBKC is heavy in oil loans, but, in fact, they had almost none and very few bad loans anywhere and their huge presence in Florida is a huge win for them.
The bank is over 100 plus years old, run by smart people, and they will buy back a huge amount of the stock if it stays at these levels, after their next earnings report in a few weeks.
They pay a nice 2.5% cash dividend, 5% downside risk from these levels, and worth at least $65 to 70 a share in takeout, which is likely at these prices.
Book value is $40 plus a share and for a large liquid bank stock, this is as good as it gets in today’s world.
Buy heavy around $50 a share and make it a top holding today in this huge sell-off. Trades plenty but use limits as always.
In my opinion, Iberia Bank may be the buy of the year for a liquid bank name with low downside risk.