Top Picks 2020: Oppenheimer Holdings (OPY)

01/20/2020 5:00 am EST


Doug Hughes


Oppenheimer Holdings (OPY) recently announced their best quarter in a decade and along with another 5% stock buyback, explains Doug Hughes, regional bank sector specialist and editor of BankNewsletter.

Earnings are growing and growing as the market goes up and up, they make more and more money each quarter. In addition, they are paying back their outstanding debt, which will add to earnings growth going forward

Meanwhile, CEO Bud Lowenthal is another year older and ready to retire to his estate; he has worked a long, hard career. 

People are paying top dollar today for these kinds of firms, and OPY is worth at least 65% more than it is trading at today and maybe 100% more. The downside is so limited unless we get a crash. Lowenthal is smart and prudent and he will not let this opportunity slip away.

In addition to paying down debt, I expect them to repurchase as many as 800,000 shares in the open market the next six months; this will create a floor on the stock.

Their income can go up and down a lot from quarter to quarter in this type of business. But with the market up and the IPO market so hot, the next 2 quarters alone are locked in at well over $1.00 a share each quarter.

They will make well over $4.00 plus in 2020, that’s a P/E of 7 today.  They did also raise the cash dividend, but since the payout is still small, tangible book value grows $0.30 each month or over a dollar share every quarter. This stock could easily trade to $35 to $40 on fundamentals and $55 plus in a sale. 

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