Category Archives: US Stocks

Enterprise Bancorp

Ticker: EBTC, Buy below $25.

Enterprise Bank offers commercial and consumer loan and deposit products, investment management, trust, and insurance services.

Why I Would Buy

  1. Insider Holding – 18%+ of the shares are held by insiders.   
  2. Dividend – 3%+ dividend, with a payout ratio < 30%.
  3. Cheap – Trailing P/E of 9, P/B of 0.9.
  4. Return on Equity: between 9 and 12+% returns on equity annually for most of last decade.

What Could Go Wrong

  1. Tiny Bank – Microcap, large exposure to commercial loans in a limited geographic area in Massachusetts.
  2. Coronavirus Impact – The extent of loan book that could become non-performing is unknown.

Disclosure: I am long EBTC, please read additional disclosures here before taking any action based on this post.

PPL Corporation

Ticker: PPL, Buy below $28.

PPL Corporation is an utility serving electricity to customers in US and Great Britain.

Why I Would Buy

  1. Defensive Buy – Diversified, good quality utility, a defensive play during a coronavirus meltdown.   
  2. Dividend – 5%+ dividend.
  3. Investment Grade Ratings – PPL long term debt is rated BBB/A- by leading rating agencies.
  4. Return on Equity: 10+% returns on equity annually for most of last decade.

What Could Go Wrong

  1. Not A Screaming Bargain – Even with the crash, PPL is trading at 14 times earnings.
  2. Expanding Sharecount – Float has doubled in the past decade.

Disclosure: I am long PPL, please read additional disclosures here before taking any action based on this post.

New Mountain Finance Corporation

Ticker: NMFC, Buy below $15.

New Mountain Finance is a Business Development Company that lends to middle market companies.

Why I Would Buy

  1. Insider Holdings – Officers and employees holds 12%+ of all outstanding shares.   
  2. Insider Buying – Strong insider buying during last 3 and 12 months. No insiders have sold last 12 months.
  3. Dividend – 10%+ yield.

What Could Go Wrong

  1. Dilution – NMFC has been indulging in massive stock issuances.
  2. Beta – Tied to the health of the US economy, could get hurt disproportionately in a recession.

Disclosure: I am long NMFC, please read additional disclosures here before taking any action based on this post.

Hersha Trust

Ticker: HT, Buy below $20.

Hersha Trust is a REIT that owns and operates upscale hotesl in United States .

Why I Would Buy

  1. Cheap – Hersha Trustcurrently sells at 8x trailing and forward AFFO (Adjusted Free Flow from Operations).   
  2. Insider Buying – Strong insider buying during last last 12 months. No insiders have sold last 3 months.
  3. Dividend – 7%+ yield.
  4. Insider Holding – More than 10% of the outstanding units are held by insiders
  5. Low Dividend Payout – Less than 70% of AFFO paid out as dividends.

What Could Go Wrong

  1. High Debt – Debt-to-Equity at 1.39, several high yield preferred securities are outstanding.
  2. Risky Market Segment – Luxury hotel occupancies are highly sensitive to the health of economy.
  3. Interest Rates – Interest rates moving up will likely hurt all leveraged REITs including HT.

Disclosure: I am long HT, please read additional disclosures here before taking any action based on this post.

LyondellBasell

Ticker: LYB, Buy below $75.

LyondellBasell  is one of the largest plastics, chemicals and refining companies in the world.

Why I Would Buy

  1. Cheap – LyondellBasellcurrently sells at 7x trailing and forward earnings.   
  2. Return on Equity – LYB has maintained a RoE in excess of 40%for past 5 years!
  3. Dividend – 5%+ yield.
  4. Credit Ratings – Investment grade credit ratings: Baa1/BBB+
  5. Low Dividend Payout – Less than 30% of earnings paid out as dividends.

What Could Go Wrong

  1. High COGS – Incredibly high COGS, approaching80%. Any increase in cost of raw materials will eat into profits.
  2. Decline In Income – MRQ net income slid down significantly (39%+) y-o-y.

Disclosure: I am long LYB, please read additional disclosures here before taking any action based on this post.