Opinions
The Panic-Proof Portfolio (Stockchase Research)
Ally Financial Inc.
ALLY-N
TOP PICK
Feb 24, 2022
Stockchase Research Editor: Michael O'Reilly This digital-only bank, who showed an over 30% increase in auto loan applications and revenues last year, is again reiterated as a TOP PICK. It has over 21,000 dealerships in its network now. Mortgage originations were up over 120%. It trades at 6x earnings compared to peers at 12x and is managing a 21% ROE. It is conservatively using cash reserves to buy back shares and reduce debt. It pays a reasonable dividend, backed by a pay out ratio under 20% of cash flow. We continue to recommend a stop at $42.50, looking to achieve $64.00 -- upside potential over 35%. Yield 2.44% (Analysts’ price target is $63.77)
$47.310
Stock price when the opinion was issued
Financial Services
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TOP PICK
Stockchase Research Editor: Michael O'Reilly ALLY is a financial services company operating in the US and Canada with a $19 billion market cap. Recently reported earnings showed revenues up 40% and EPS 55% higher than analyst expectations. It has a decent dividend backed by a payout ratio of under 25% of cash flow.
Management announced a 32% increase in the dividend and has authorized a share buyback program. We would buy this with $42.50, looking to achieve $61.50 -- upside potential over 19%. Yield 1.46% (Analysts’ price target is $61.26)
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TOP PICK
Stockchase Research Editor: Michael O'Reilly We reiterate ALLY as a TOP PICK. The financial services company, provides financing to car dealerships, insurance, mortgage and corporate financing services to companies operating in the US and Canada. It has a $18 billion market cap. Recently reported earnings showed expanding margins and EPS 70% higher than year ago, again beating analyst expectations. It has a decent growing dividend (up 90% over the past 3 years) that is backed by a payout ratio of 33% of cash flow. Its cash reserves have grown to an estimated $16 billion, while paying down debt. We would buy this with a stop loss at $42.50 , looking to achieve $67.50 -- upside potential over 37%. Yield 2.09% (Analysts’ price target is $67.63)
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PAST TOP PICK
(A Top Pick Feb 24/22, Down 10.1%)Stockchase Research Editor: Michael O’Reilly Our PAST TOP PICK with ALLY has triggered its stop at $42.50. To remain disciplined, we recommend covering the position at this time. This will result in a net investment loss of 16%, when combined with our previous buy recommendation.
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