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vendredi 13 juillet 2012

THE PLAY OF THE DAY: FBP DRL

A double play for a Friday the 13th...

As we have seen so far this morning, big banks (JPM   WFC) are reporting profits much better than anticipated. JPM is a trading bank combined with regular bank BUT Wells Fargo is a regular bank (large by all means...) and has nothing to do with a banking investment. Both did made solid profits.

Conclusions: as far as banks are concerned, we could be in for a great Q2 profit report for most of them and especially regional banks that have been hammered recently.

Stock market being what it is, i think that finding stars before others make the difference and in that regard Puerto Rico is an area where  problems have been larger than anywhere else but fixes will come and economy will improve out there. It will do that after other states i agree BUT it will improve.

So my point is that it could be the time to get back in and start accumulating the 2 following banks:

FBP has been growing (credit card portfolio base  bought for 402M$) and is still one of the largest UNDERVALUED bank of the area with a price to book ratio of only 0,56. Also very important to note is their share float. So low that any profitability would impact shares a lot faster than any other banks.

DRL is evaluated only as 0,39 (price to book ratio) and is on the verge of profitability with a 200M$ load provision taken on the last quarter (when stock dropped from 1,80$ to 1,20$) and is ready in my opinion to achieve profitability and growth in all sectors of operation. Also very small share float.

With that in mind, these 2 banks, that i have played short term for 5-10% profit each time, are poised for excellent growth over the next year and should be providing investors with a great return %. They are highly volatile but it is worthy.

Today launch a week special: Banks. They are in the first to reports and will give an excellent idea on how the market will react next week.

As usual (and more actually) DO NOT INVEST MORE THAN YOU CAN AFFORD TO LOSE and always do your own due diligence before investing in any stock. CHEAP SHARE PRICE does not necessary mean a real bargain. Play with extreme caution.

Get THE PLAY OF THE DAY on Twitter : @investman2

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