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Poor creole.
People are afraid to invest in Louisiana because of its deep attachment to the North American energy industry, which took a big hit in late 2014 when the Saudis decided that they no longer wanted to lose market share to the US unconventional shale production. What people don’t understand is that the oil and gas production in Louisiana is of the old school conventional variety, and the curtailment of production we have been seeing domestically is actually occurring in North Dakota and the Eagleford area in Texas, not in Louisiana. Furthermore, the Louisiana oil and gas production is largely linked to the larger multinational firms and the effect of the low commodity prices does not directly hinder the Louisiana economy.
The great NY Yankee, Ron Guidry, came from Cajun country.
There’s a lot more to Lafayette, LA besides crawfish and Cajun food. If you take a bird’s eye view, the Baton Rouge metro area surpassed 400,000 jobs in 2015—the first time that has been accomplished in the area of more than 800,000 people. The surge in jobs last year comes after a great 2014, and the area has added about 10,000 jobs every year since 2010. This part of the state is a driver of jobs for the state economy. During the middle of the year, home sales were up so much, hovering between at least 10% and 11% higher than the year before. They expect record growth going into 2017. The biggest gains will be seen from Baton Rouge to Lake Charles. They have $145 billion dollars worth of projects that have been announced for those areas with about $62 billion already under construction. With this kind of Cajun heat, you need an awesome bank to keep the money flowing. The year 2016 should be a good one for banks in the United States, with the best managed institutions doing especially well.
The outlook for the banks has lately turned brighter as an expected Federal Reserve interest-rate increase will widen banks’ net interest margins. Although this increase has been delayed, they really have nowhere to go but up on rates. The housing market is improving and the number of underwater mortgages is decreasing. The new strict underwriting standards will limit bad loans from happening, as will the relatively low unemployment rate. People have more equity in their homes now than 10 years ago. That all spells banking profits.
Investing in community bank stocks has been very lucrative for $$$MR. MARKET$$$. A number of stocks in my 66 consecutive profitable trade streak are those of small banks. These little banks do not have derivative portfolios, they don’t make idiotic loans chasing excess returns or engage in investment banking or trading. They take deposits and they make loans. They lend to individuals, small businesses, commercial real estate, education and other traditional lending activities. It’s called smart business. Others may call it a money machine.
I guess by now you know where I am going with all of this. Today I bought stock in Home Bancorp (HBCP) at 28.00. I will sell it in 4 to 6 weeks at 32.28. Here’s why I like Home Bancorp:
This stock is up 33% in less than 4 months and its PE is still comfortably at 15.6, with a forward PE of 12. The stock pays a dividend of 1.3% to keep me in beer money until it hits my target. The company recently increased its dividend demonstrating its confidence in future prospects and its balance sheet.
Worried about oil prices? I’m not, but even if this was a concern, the balance of loans to companies in the energy sector totaled $36.8 million, or only 3.0% of outstanding loans, at March 31, 2016.
Home Bancorp, Inc. operates as the holding company for Home Bank, National Association that provides various banking products and services in Louisiana. The company offers deposits products, including interest-bearing and noninterest-bearing checking, money market, savings, and certificates of deposit accounts; and online banking services. It also provides various loan products, such as one-to-four-family first mortgage loans, home equity loans and lines, commercial real estate loans, construction and land loans, multi-family residential loans, commercial and industrial loans, and consumer loans. The company operates through a network of 30 banking offices in the Greater Lafayette, Baton Rouge, Greater New Orleans and Northshore regions of south Louisiana, and the Natchez and Vicksburg regions of west Mississippi. Home Bancorp, Inc. was founded in 1908 and is headquartered in Lafayette, Louisiana.
The bank's return on average asset and average equity were 0.9% and 8.0%, respectively. The acquisition of Louisiana Bancorp for $74.5 million in an all-cash deal last June was an incredible success. The merger doubled Home Bancorp's in-market deposits in the New Orleans area. You might remember Hurricane Katrina over 10 years ago? That’s right…nowhere to go but up. HBCP acquired Bank of New Orleans in September of 2015. If you build it, they will come. Oh they will come.
Home Bancorp was founded in 1908. They are still here. They must be doing something right. You can see it in the numbers:
· Market Cap = $203MM
· Assets = $1.5 billion as of March 31, 2016
· Over the last 8 years, 192% asset increase
· CAGR = 15.9%
Over that period, this little bank stock with a low PE ratio has outperformed the S&P 500 and the US Bank indices. That means the stock is definitely undervalued.
They have very strong organic loan growth
• Relatively small investment portfolio
• Core deposit growth has offset capital deployment
· Average Loan yield of 5.20% in 1Q 2016 (81st percentile)
Shareholders will love the fact that they instituted a Share Repurchases Program, in recognition of the fact that their stock is undervalued. The share repurchase program was approved in 2Q 2016. The Company may purchase up to 365,000 shares under this plan.
The boss, John Bordelon, President and Chief Executive Officer knows his stuff. He has led Home Bank since 1993. He previously served in various management and other positions since joining the Bank in 1981. Former Chairman of the following organizations: Greater Lafayette Chamber of Commerce, University of Louisiana Alumni Association, Community Bankers of Louisiana, and Ragin Cajun Athletic Foundation. They also have a Guidry on their management team! Darren Guidry, Chief Credit Officer Joined Home Bank in 1993. He previously served as Chief Lending Officer.
ANAL-ysts have projected HBCP to card $2.20/share of earnings in 2016. That’s really preposterous given that the recent mergers are going to be accretive to earnings once the duplicity costs are squeezed out in this quarter. You have 3 banks operating as one right now. $$$MR. MARKET$$$ projects that earnings will be $2.46/share for the year which means that even at the current low PE multiple, the stock price will go to:
15.6 x 2.46 = 38.38/share – which is well past my target sell price.
Here’s what the boss had to say:
"Organic loan growth was healthy during the quarter at 10% on an annualized basis," stated John W. Bordelon, President and Chief Executive Officer of the Company and the Bank. "We continue to work very closely with our customers in the energy sector to help them manage through the current cycle," stated Bordelon. "Many of those customers have weathered such cycles in the past. Although their resilience is not surprising given their liquidity and lower leverage positions going into the downturn, it is nonetheless admirable."
Look at this guy, sandbagging it. I am going to eat so much etouffee with my profits on this stock trade that I will be playing the fiddle and doing the Cajun jitterbug!
I am HUGE!
$$$MR. MARKET$$$
People are afraid to invest in Louisiana because of its deep attachment to the North American energy industry, which took a big hit in late 2014 when the Saudis decided that they no longer wanted to lose market share to the US unconventional shale production. What people don’t understand is that the oil and gas production in Louisiana is of the old school conventional variety, and the curtailment of production we have been seeing domestically is actually occurring in North Dakota and the Eagleford area in Texas, not in Louisiana. Furthermore, the Louisiana oil and gas production is largely linked to the larger multinational firms and the effect of the low commodity prices does not directly hinder the Louisiana economy.
The great NY Yankee, Ron Guidry, came from Cajun country.
There’s a lot more to Lafayette, LA besides crawfish and Cajun food. If you take a bird’s eye view, the Baton Rouge metro area surpassed 400,000 jobs in 2015—the first time that has been accomplished in the area of more than 800,000 people. The surge in jobs last year comes after a great 2014, and the area has added about 10,000 jobs every year since 2010. This part of the state is a driver of jobs for the state economy. During the middle of the year, home sales were up so much, hovering between at least 10% and 11% higher than the year before. They expect record growth going into 2017. The biggest gains will be seen from Baton Rouge to Lake Charles. They have $145 billion dollars worth of projects that have been announced for those areas with about $62 billion already under construction. With this kind of Cajun heat, you need an awesome bank to keep the money flowing. The year 2016 should be a good one for banks in the United States, with the best managed institutions doing especially well.
The outlook for the banks has lately turned brighter as an expected Federal Reserve interest-rate increase will widen banks’ net interest margins. Although this increase has been delayed, they really have nowhere to go but up on rates. The housing market is improving and the number of underwater mortgages is decreasing. The new strict underwriting standards will limit bad loans from happening, as will the relatively low unemployment rate. People have more equity in their homes now than 10 years ago. That all spells banking profits.
Investing in community bank stocks has been very lucrative for $$$MR. MARKET$$$. A number of stocks in my 66 consecutive profitable trade streak are those of small banks. These little banks do not have derivative portfolios, they don’t make idiotic loans chasing excess returns or engage in investment banking or trading. They take deposits and they make loans. They lend to individuals, small businesses, commercial real estate, education and other traditional lending activities. It’s called smart business. Others may call it a money machine.
I guess by now you know where I am going with all of this. Today I bought stock in Home Bancorp (HBCP) at 28.00. I will sell it in 4 to 6 weeks at 32.28. Here’s why I like Home Bancorp:
This stock is up 33% in less than 4 months and its PE is still comfortably at 15.6, with a forward PE of 12. The stock pays a dividend of 1.3% to keep me in beer money until it hits my target. The company recently increased its dividend demonstrating its confidence in future prospects and its balance sheet.
Worried about oil prices? I’m not, but even if this was a concern, the balance of loans to companies in the energy sector totaled $36.8 million, or only 3.0% of outstanding loans, at March 31, 2016.
Home Bancorp, Inc. operates as the holding company for Home Bank, National Association that provides various banking products and services in Louisiana. The company offers deposits products, including interest-bearing and noninterest-bearing checking, money market, savings, and certificates of deposit accounts; and online banking services. It also provides various loan products, such as one-to-four-family first mortgage loans, home equity loans and lines, commercial real estate loans, construction and land loans, multi-family residential loans, commercial and industrial loans, and consumer loans. The company operates through a network of 30 banking offices in the Greater Lafayette, Baton Rouge, Greater New Orleans and Northshore regions of south Louisiana, and the Natchez and Vicksburg regions of west Mississippi. Home Bancorp, Inc. was founded in 1908 and is headquartered in Lafayette, Louisiana.
The bank's return on average asset and average equity were 0.9% and 8.0%, respectively. The acquisition of Louisiana Bancorp for $74.5 million in an all-cash deal last June was an incredible success. The merger doubled Home Bancorp's in-market deposits in the New Orleans area. You might remember Hurricane Katrina over 10 years ago? That’s right…nowhere to go but up. HBCP acquired Bank of New Orleans in September of 2015. If you build it, they will come. Oh they will come.
Home Bancorp was founded in 1908. They are still here. They must be doing something right. You can see it in the numbers:
· Market Cap = $203MM
· Assets = $1.5 billion as of March 31, 2016
· Over the last 8 years, 192% asset increase
· CAGR = 15.9%
Over that period, this little bank stock with a low PE ratio has outperformed the S&P 500 and the US Bank indices. That means the stock is definitely undervalued.
They have very strong organic loan growth
• Relatively small investment portfolio
• Core deposit growth has offset capital deployment
· Average Loan yield of 5.20% in 1Q 2016 (81st percentile)
Shareholders will love the fact that they instituted a Share Repurchases Program, in recognition of the fact that their stock is undervalued. The share repurchase program was approved in 2Q 2016. The Company may purchase up to 365,000 shares under this plan.
The boss, John Bordelon, President and Chief Executive Officer knows his stuff. He has led Home Bank since 1993. He previously served in various management and other positions since joining the Bank in 1981. Former Chairman of the following organizations: Greater Lafayette Chamber of Commerce, University of Louisiana Alumni Association, Community Bankers of Louisiana, and Ragin Cajun Athletic Foundation. They also have a Guidry on their management team! Darren Guidry, Chief Credit Officer Joined Home Bank in 1993. He previously served as Chief Lending Officer.
ANAL-ysts have projected HBCP to card $2.20/share of earnings in 2016. That’s really preposterous given that the recent mergers are going to be accretive to earnings once the duplicity costs are squeezed out in this quarter. You have 3 banks operating as one right now. $$$MR. MARKET$$$ projects that earnings will be $2.46/share for the year which means that even at the current low PE multiple, the stock price will go to:
15.6 x 2.46 = 38.38/share – which is well past my target sell price.
Here’s what the boss had to say:
"Organic loan growth was healthy during the quarter at 10% on an annualized basis," stated John W. Bordelon, President and Chief Executive Officer of the Company and the Bank. "We continue to work very closely with our customers in the energy sector to help them manage through the current cycle," stated Bordelon. "Many of those customers have weathered such cycles in the past. Although their resilience is not surprising given their liquidity and lower leverage positions going into the downturn, it is nonetheless admirable."
Look at this guy, sandbagging it. I am going to eat so much etouffee with my profits on this stock trade that I will be playing the fiddle and doing the Cajun jitterbug!
I am HUGE!
$$$MR. MARKET$$$
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