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You know when you’re at the casino and you have the black chips stacked to the ceiling at the blackjack table? The dealer gives you a ten….then gives you another ten….and he turns over a seven in front of him. So you have 20 and he has a 7 showing, meaning that he either has a 17 or a soft hand that he’ll need to hit. I can go through the odds, but at the end of the day, this hand is what is known as “drinking machine”. The predictive benefit of having “drinking machine” is that you get to say “can’t Lose!....Can’t LOSE!....CAN’T LOSE!!” before the dealer turns over everyone’s cards.
Now the same thing can be said for buying stock in a company that has over a 30% profit margin, growing revenues and earnings and trades at a PE value that is less than 7. Essentially the stock price just CANNOT get any lower. You have “drinking machine”. And yes, you get to say “can’t Lose!....Can’t LOSE!....CAN’T LOSE!!”.
Today I bought stock in Customers Bancorp (CUBI) at 38.38. I will sell it in 4 to 6 weeks at 44.33. Here’s why I like CUBI.
This is a dream chart…just dreamy. I mean this stock is up over 240% in the 12 months yet its PE is less than 7 (compared to the industry PE of 13). Why is this stock a winner? It’s because there is simply no way its price can go any lower. If it can’t go lower, it just has to go higher.
Customers Bancorp, Inc. operates as the bank holding company for Customers Bank that provides financial products and services to individual consumers, and small and middle market businesses. It operates in two segments, Customers Bank Business Banking and BankMobile. The company accepts various deposit products, such as checking, savings, money market deposit, time deposit, non-interest-bearing demand accounts, individual retirement accounts, and other deposit accounts, as well as non-retail time deposits. It also provides commercial and industrial lending services; small business administration and paycheck protection program loans; multi-family and commercial real estate loans; commercial loans to mortgage companies; equipment financing services and specialty lending; mortgage warehouse loans; and home equity and residential mortgage and installment loans. In addition, the company offers private banking services; mobile phone banking, internet banking, wire transfers, electronic bill payment, lock box, remote deposit capture, courier, merchant processing, cash vault, controlled disbursements, and positive pay services; and cash management services, such as account reconciliation, collections, and sweep accounts. It operates 12 full-service branches, as well as limited production and administrative offices in Southeastern Pennsylvania, including Bucks, Berks, Chester, Philadelphia, and Delaware Counties; Rye Brook and New York; Hamilton, New Jersey; Boston, Massachusetts; Providence, Rhode Island; Portsmouth, New Hampshire; Manhattan and Melville, New York; Washington D.C.; and Chicago, Illinois. Customers Bancorp, Inc. was founded in 1997 and is headquartered in West Reading, Pennsylvania.
Customers Bank has deep roots in the communities they serve. They seek to strengthen those communities by providing a variety of financing options, primarily to privately-owned businesses of all sizes at work in their communities, including low- to moderate-income communities. Customers Bank understands that businesses located in the communities they serve are essential to community development and revitalization, especially in low- to moderate-income communities. They support those businesses by providing affordable commercial financing. Additionally, Customers Bank has made a substantial commitment to be a leader in leading programs tied to the SBA as another means of financing small businesses with reasonable terms and conditions.
Why is this stock price climbing? The business environment for these types of banks is simply spectacular. CUBI came out with quarterly earnings of $2.14 per share, beating the ANAL-yst asstimate of $1.35 per share. They not only beat the asstimate. They destroyed it. This quarterly report represents an earnings surprise of 58.52%. A quarter ago, it was expected that this bank holding company would post earnings of $1.32 per share when it actually produced earnings of $1.65, delivering a surprise of 25%. This compares to earnings of $0.26 per share a year ago. CUBI est un fuego. Over the last four quarters, the company has surpassed consensus EPS estimates four times.
CUBI has done an amazing job of maintaining its traditional bricks and mortar community banking presence while also venturing successfully into the online space. The online growth is obvious, given that CUBI only has 13 branches, of which 11 are centrally located near its headquarters in Eastern Pennsylvania.
About 5 billion dollars of its asset growth over the past several quarters has come from PPP lending. PPP loans are eligible for full or partial forgiveness if the money is used for qualifying costs including payroll, rent, mortgage interest, utilities, worker protection, supplier costs, operations costs and property damage costs. PPP-related lending is likely to drive a considerable amount of revenue growth and tangible book value growth for CUBI and companies just like it. The PPP unit is growing at a double digit rate for CUBI. The economic growth coming out of the pandemic will be like HGH and steroids for banks like CUBI as people, after being laid off from the jobs that they hated, are trying to establish small businesses.
With the passage of the Economic Aid Act, new borrowers may be eligible to receive an SBA Guaranty Fee waiver and up to three months of principal and interest SBA Debt Relief Payments on a loan approved by the SBA between February 1 and September 30, 2021, subject to the availability of funds. This is a free ride for CUBI and what is crazy is that PPP books more net interest income when the government bails out these loans. Projections are that 75% of these loans will be forgiven. The best thing is that this program gives CUBI an open book on potential customers and businesses that actually succeed and they will be able to reel in these customers for a long time.
Ignoring the business itself for a minute, Customers Bancorp has been an awesome momentum stock – buy high, sell higher. Its short term price change and monthly price change compare very favorably with its industry. Over the past quarter, shares of Customers Bancorp have risen 36%, and are up 240% in the last year. On the other hand, the S&P 500 has only moved 8% and 40%, respectively. Over the past two months, 5 earnings estimates moved higher compared to none lower for the full year. These revisions helped boost CUBI's consensus estimate, increasing from $4.14 to $5.07 in the past 60 days. Looking at the next fiscal year, 4 estimates have moved upwards while there have been no downward revisions in the same time period.
What’s better than loving CUBI as a momentum stock? How about loving it as a value stock? It’s a candy mint….it’s a breath mint. It’s two mints in one. As a value investment, Customers Bancorp has a trailing twelve months PE ratio of 7. This level actually compares favorably with the market at large, as the PE for the S&P 500 stands at about 29.29. In fact, CUBI’s PE ratio is below its midpoint level over the past 5 years. What this means is, that despite its amazing stock price ascent, the company is STILL undervalued, especially when you compare it to its peers. If you want to look at Price/Sales ratio, Customers Bancorp has a P/S ratio of about 2.16. This is substantially lower than the S&P 500 average, which is at 3.09 right now. Finally, CUBI has a P/B ratio of 1.26. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 1.89.
If shares go for the industry multiple of its peers, CUBI would be an $80 stock. With the specter of inflation looming, rising rates, a steepening yield curve and a strengthening economy certainly don’t hurt the prospects for bank stocks either. Capital spending is on the rise, and more corporations will commit to capital investment, buying plant and equipment, which will lead to more growth in credit cards, auto loans and deposits that should boost financials for CUBI and other banks like it.
So at the end of the day, what is there to say other than DRINKING MACHINE!!!
I am HUGE!
$$$MR. MARKET$$$
Now the same thing can be said for buying stock in a company that has over a 30% profit margin, growing revenues and earnings and trades at a PE value that is less than 7. Essentially the stock price just CANNOT get any lower. You have “drinking machine”. And yes, you get to say “can’t Lose!....Can’t LOSE!....CAN’T LOSE!!”.
Today I bought stock in Customers Bancorp (CUBI) at 38.38. I will sell it in 4 to 6 weeks at 44.33. Here’s why I like CUBI.
This is a dream chart…just dreamy. I mean this stock is up over 240% in the 12 months yet its PE is less than 7 (compared to the industry PE of 13). Why is this stock a winner? It’s because there is simply no way its price can go any lower. If it can’t go lower, it just has to go higher.
Customers Bancorp, Inc. operates as the bank holding company for Customers Bank that provides financial products and services to individual consumers, and small and middle market businesses. It operates in two segments, Customers Bank Business Banking and BankMobile. The company accepts various deposit products, such as checking, savings, money market deposit, time deposit, non-interest-bearing demand accounts, individual retirement accounts, and other deposit accounts, as well as non-retail time deposits. It also provides commercial and industrial lending services; small business administration and paycheck protection program loans; multi-family and commercial real estate loans; commercial loans to mortgage companies; equipment financing services and specialty lending; mortgage warehouse loans; and home equity and residential mortgage and installment loans. In addition, the company offers private banking services; mobile phone banking, internet banking, wire transfers, electronic bill payment, lock box, remote deposit capture, courier, merchant processing, cash vault, controlled disbursements, and positive pay services; and cash management services, such as account reconciliation, collections, and sweep accounts. It operates 12 full-service branches, as well as limited production and administrative offices in Southeastern Pennsylvania, including Bucks, Berks, Chester, Philadelphia, and Delaware Counties; Rye Brook and New York; Hamilton, New Jersey; Boston, Massachusetts; Providence, Rhode Island; Portsmouth, New Hampshire; Manhattan and Melville, New York; Washington D.C.; and Chicago, Illinois. Customers Bancorp, Inc. was founded in 1997 and is headquartered in West Reading, Pennsylvania.
Customers Bank has deep roots in the communities they serve. They seek to strengthen those communities by providing a variety of financing options, primarily to privately-owned businesses of all sizes at work in their communities, including low- to moderate-income communities. Customers Bank understands that businesses located in the communities they serve are essential to community development and revitalization, especially in low- to moderate-income communities. They support those businesses by providing affordable commercial financing. Additionally, Customers Bank has made a substantial commitment to be a leader in leading programs tied to the SBA as another means of financing small businesses with reasonable terms and conditions.
Why is this stock price climbing? The business environment for these types of banks is simply spectacular. CUBI came out with quarterly earnings of $2.14 per share, beating the ANAL-yst asstimate of $1.35 per share. They not only beat the asstimate. They destroyed it. This quarterly report represents an earnings surprise of 58.52%. A quarter ago, it was expected that this bank holding company would post earnings of $1.32 per share when it actually produced earnings of $1.65, delivering a surprise of 25%. This compares to earnings of $0.26 per share a year ago. CUBI est un fuego. Over the last four quarters, the company has surpassed consensus EPS estimates four times.
CUBI has done an amazing job of maintaining its traditional bricks and mortar community banking presence while also venturing successfully into the online space. The online growth is obvious, given that CUBI only has 13 branches, of which 11 are centrally located near its headquarters in Eastern Pennsylvania.
About 5 billion dollars of its asset growth over the past several quarters has come from PPP lending. PPP loans are eligible for full or partial forgiveness if the money is used for qualifying costs including payroll, rent, mortgage interest, utilities, worker protection, supplier costs, operations costs and property damage costs. PPP-related lending is likely to drive a considerable amount of revenue growth and tangible book value growth for CUBI and companies just like it. The PPP unit is growing at a double digit rate for CUBI. The economic growth coming out of the pandemic will be like HGH and steroids for banks like CUBI as people, after being laid off from the jobs that they hated, are trying to establish small businesses.
With the passage of the Economic Aid Act, new borrowers may be eligible to receive an SBA Guaranty Fee waiver and up to three months of principal and interest SBA Debt Relief Payments on a loan approved by the SBA between February 1 and September 30, 2021, subject to the availability of funds. This is a free ride for CUBI and what is crazy is that PPP books more net interest income when the government bails out these loans. Projections are that 75% of these loans will be forgiven. The best thing is that this program gives CUBI an open book on potential customers and businesses that actually succeed and they will be able to reel in these customers for a long time.
Ignoring the business itself for a minute, Customers Bancorp has been an awesome momentum stock – buy high, sell higher. Its short term price change and monthly price change compare very favorably with its industry. Over the past quarter, shares of Customers Bancorp have risen 36%, and are up 240% in the last year. On the other hand, the S&P 500 has only moved 8% and 40%, respectively. Over the past two months, 5 earnings estimates moved higher compared to none lower for the full year. These revisions helped boost CUBI's consensus estimate, increasing from $4.14 to $5.07 in the past 60 days. Looking at the next fiscal year, 4 estimates have moved upwards while there have been no downward revisions in the same time period.
What’s better than loving CUBI as a momentum stock? How about loving it as a value stock? It’s a candy mint….it’s a breath mint. It’s two mints in one. As a value investment, Customers Bancorp has a trailing twelve months PE ratio of 7. This level actually compares favorably with the market at large, as the PE for the S&P 500 stands at about 29.29. In fact, CUBI’s PE ratio is below its midpoint level over the past 5 years. What this means is, that despite its amazing stock price ascent, the company is STILL undervalued, especially when you compare it to its peers. If you want to look at Price/Sales ratio, Customers Bancorp has a P/S ratio of about 2.16. This is substantially lower than the S&P 500 average, which is at 3.09 right now. Finally, CUBI has a P/B ratio of 1.26. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 1.89.
If shares go for the industry multiple of its peers, CUBI would be an $80 stock. With the specter of inflation looming, rising rates, a steepening yield curve and a strengthening economy certainly don’t hurt the prospects for bank stocks either. Capital spending is on the rise, and more corporations will commit to capital investment, buying plant and equipment, which will lead to more growth in credit cards, auto loans and deposits that should boost financials for CUBI and other banks like it.
So at the end of the day, what is there to say other than DRINKING MACHINE!!!
I am HUGE!
$$$MR. MARKET$$$
heh heh heh
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