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Jun. 15 2004, 09:30 AM ET
Nearest price: 14.43 (06/15/04) |
by golfnut (profile)
(all of golfnut's ratings) |
rating:
Strong Buy |
(Previous rating: Strong Buy,
on Apr. 21 2004, 12:49 PM ET)
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Apr. 21 2004, 9:02 PM ET
Nearest price: 13.85 (04/21/04) |
by corvettekid (profile)
(all of corvettekid's ratings) |
rating:
Strong Buy |
(Previous rating: Strong Buy,
on Apr. 20 2004, 5:43 PM ET)
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A Connecticut juggernaut in the making, NewAlliance is poised to become a big winner in the lucrative CT banking market. My Plusses and Minuses follow:
Plusses:
(1) BV of $12.50 a share (TBV of $8.00/sh) gives stock some floor during turbulent times.
(2) Lousy efficiency ratio offers cost-savings to flow to earnings down the line.
(3) Large cash hoard and asset-sensitive nature of balance sheet bodes well if rates start to rise.
(4) Mgmt. is diverse, experienced, and well-versed in CT marketplace.
(5) Russell 2000 buying should buoy stock in coming months.
(6) Expect a dividend.
(7) Capital already deployed via SBMC/ANE purchases; no surprises ala PFS likely.
(8) Many "flippers" probably exited stock during first 2 weeks; replay of 3-6 month trading patterns of BRKL and ICBC substantially reduced barring dramatic downdrafts.
Minuses
(1) Can't sell bank for 5 years (as if important to institutions with 3 month time horizon??)
(2) TBV lower than BV -- result of acquisitions.
(3) No stock buybacks for 11 1/2 months.
(4) Limited dividend potential due to depressed earnings.
(5) Hostile thrift/bank environment with Fed likely to be tightening in coming quarters.
(6) Loss of New Haven Savings Bank name could prevent bank from picking up other bank's PO'd customers from M&A in state.
NewAlliance is certainly a long-term winner. In trying to analyze for the next 6-12 months, I look at the Provident trading history. Adjusting for the fact that the Fed was on hold during that time (though the mortgage market had some turbulent times) and that the overall stock market was rising, I think it's safe to say that if we have a slow-and-steady rising market through the Election that NABC could inch it's way up into the $16.00 range and settle there, with a potential spike to $18.00. Each of these numbers is about 15% lower than PFS for it's range and spike figures; this "haircut" represents my estimation of the less-friendly rate environment, sluggish market, and higher valuation embedded in NABC. Perhaps the discount should be more, or perhaps thrifts have one final fling where NABC matches or even exceeds the performance of PFS and TONE. A middling ground seems a fair compromise and those price targets seem reasonable within a 6-9 month time horizon. I peg fair value for this stock at 110-130% of book, so I rate it a STRONG BUY at current levels for both short-term speculators and long-term investors. Good Luck!!
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3
said yes (of 4 -- 75.00%)
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Apr. 9 2004, 11:22 AM ET
Nearest price: 14.32 (04/12/04) |
by Conor (profile)
(all of Conor's ratings) |
rating:
Strong Buy |
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Apr. 9 2004, 10:52 AM ET
Nearest price: 14.32 (04/12/04) |
by persistent (profile)
(all of persistent's ratings) |
rating:
Strong Buy |
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Apr. 9 2004, 02:18 AM ET
Nearest price: 14.32 (04/12/04) |
by Niagra (profile)
(all of Niagra's ratings) |
rating:
Strong Buy |
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Mar. 9 2004, 06:38 AM ET
Nearest price: 15.17 (04/02/04) |
by go4 (profile)
(all of go4's ratings) |
rating:
Strong Buy |
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