We have been adding to our holdings in Tri City Bankshares (TRCY); the bank is located in Wisconsin, where a lot of growth is coming due to the Foxconn plant coming; indeed, the President even said this “may be the greatest opportunity for a generation in Southwestern Wisconsin”, suggests Doug Hughes, editor of BankNewsletter.
This will be huge for Tri City, as the bank just opened a new branch in Southwestern Wisconsin, the first one in a decade. They previously ,bought 5 locations in this area in 2009. What a great time to buy; now it will pay off huge. There will be 13,000 new workers at this campus.
Tri City was one of the first supermarket banks, something we like. They also own all their locations. As a result of the Foxconn plant, we now believe its locations in that area are worth 25% more each.
Look for 20% earnings growth and 20% plus dividend growth for the foreseeable future, which means a test of the old highs of $25.50 to $27.00 a share at least, in the short-term stock. We would then look for $34+ by the end of next year — or sooner if they did sell out.
We see almost no downside risk; the banks happens to be very safe and conservative. There is plenty of earnings growth on this one yet to come. They worked hard and were patient, and now it will pay off.
Meanwhile, the bank pays a nice 2.2% cash dividend now, and that’s going up. Insiders own over 62% of the stock and their book value will be around $17.00 a share by year end. The shares trade plenty, but use limits as always.
There are not many names left among regional banks in this part of the country with strong growth, a cheap valuation and huge insider ownership. This bank always does the right thing for shareholders. If they were ever to sell, it will likely be soon as the timing is perfect to get 2 times book value.
