Opinions
James Rife
VersaBank
VB-T
DON'T BUY
Apr 25, 2016
Stock price when the opinion was issued
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He looked at this as a possible investment on its IPO. This is a non-branch bank that does commercial lending on buildings and things and is based in London, Ont. It is down $0.20 from its issue. He would like to see a couple of quarters of earnings and see their track record. Has less than 10% ROE at the moment.
He likes it. It is a very cheap stock at 8 to 9 times earnings. They paid their first dividend a couple of months ago. It is a sign of a company saying they are now stable and confident in their future revenues. They buy alternative loans. The dividend will grow over time and there is momentum. There is a bit of a pull back that is general weakness in the market. It is an opportunity to add to the shares.
It is a charter one bank. It is a small name and it is a tough peer group to complete with. There is no reason to go down to lower capitalization in this business. It does not do you any good to do a lot of work in one particular name in this sector.