Home Capital Group (HCG.TO) Buy, Sell or Hold

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Home Capital Group (HCG.TO)

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44.26

-0.00 (0.00%)

as of Sep 1, 2023, 8:00:00 pm Market Open.

104 watching

HOLD

This has always been expensive in his model. His model price is $31.80 so it is right on his model price. The model price has been coming down.

BUY

A sub prime mortgage lender, primarily in Ontario. Also has a little credit card operation. Had terrific experience with loan losses as they don't have very many. This has been during a very buoyant housing market. Trading at a much lower price to earnings ratio that was a year ago.

HOLD

Very well managed. Likes its niche market. Came off quite sharply when it disappointed on earnings. Trades at a premium to other financial companies. Not sure it can maintain the high historical growth rates. A pause by the Fed in interest rates would be good for it.

DON'T BUY

Housing market has been extremely strong for a long time. forecasters are looking for a little bit of a slowdown. This stock could come under a little bit of pressure.

SELL

This is the end of the cycle for financials. The stock is very economy sensitive.

DON'T BUY

Mortgages, mostly sub-prime. The stock is not doing well and with the weakening US housing market, the risk is too high.

BUY

Reported good earnings today. Operates in the sub prime mortgage market. Their record of loan losses has been extraordinarily low. As interest rates rise, activity in the housing sector tends to decline. Also have a growing credit card business.

SELL

Has a fabulous long term structure going back 4/5 years. Shorter term, the risks are there because of exposure to the consumer and housing sector. From a technical perspective, it could get back down to $20.

BUY

Provides mortgages for people who don't have an established credit. An interesting area. Could be a takeover target for a large bank.

DON'T BUY

3 companies, Brookfield Asset Management (BAM.A-T), Home Capital (HCG-T) and Kingsway Financial (KFS-T) have been great calls for the last couple of years and all 3, in the last couple of months, have started to show weaker characteristics. Most of it is probably due to higher interest rates and prospects in the real estate market.

TOP PICK

Took a big hit in March, because they announced poorer prospects, going forward. A good one to own at any attractive entry price.

TOP PICK

A very high-quality business. Their lending has been superb in terms of loan losses. Their abilities to find segments and grow have been terrific. Return on equity is unbelievable. A good entry point.

BUY

Does mortgage lending that big banks won’t do. Their return on equity has averaged well over 30%. Just had a blow out quarter. Looks reasonable at this level. The big risk would be any weakening in house pricing or some kind of recession.

DON'T BUY

Is model price is $33.53 which is a negative 5% differential. Has had a nice pullback.

WEAK BUY

Very nervous about this stock. They have made their history on higher risk residential mortgage loans. Looking at where the US housing market is right now, it is so near the edge of cracking and how can that not have an affect on Canada. However these guys have consitantly returned 35% on equity. Trading at 20 X earnings.

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Home Capital Group (HCG.TO)