Market Overview

Four Financial Stocks That Doubled in Six Months (FBC, OCN, RDN, WAC)

Here is a quick look at four financial stocks that have seen their share prices more than double in the past six months: Flagstar Bancorp (NYSE: FBC), Ocwen Financial (NYSE: OCN), Radian Group (NYSE: RDN) and Walter Investment Management (NYSE: WAC). Note that all four of them are mortgage-related companies and their stocks have pulled back from their recent 52-week highs.

Flagstar Bancorp

Shares of this savings and loan company are trading more than 177 percent higher year to date, despite pulling back about three percent late last week. The Troy, Michigan-based company operates more than 110 banking centers in Michigan and 25 home lending centers in 13 states, and it sports a market capitalization near $880 million. Its price-to-earnings (P/E) ratio is a bit less than the industry average. But the long-term earnings per share (EPS) growth forecast is only about three percent, and the return on equity is less than eight percent.

However, short interest is less than one percent of the float. Both of the analysts surveyed by Thomson/First Call who follow the stock recommend holding shares and have for more than three months. Their mean price target, or where they expect the stock to go, is now more than eight percent higher than the current share price. The stock has easily outperformed larger competitor Huntington Bancshares (NASDAQ: HBAN) and the S&P 500 over the past six months.

Ocwen Financial

This loan servicing and asset management company's shares are about 130 percent higher than six months ago but also down nearly 12 percent from the multi-year high reached in late October. The Atlanta-based company has a market cap of about $4.6 billion, and the long-term EPS growth forecast is about 23 percent. The forward earnings multiple is less than the industry average P/E ratio. The return on equity is about 10 percent, and shares sold short represent more than four percent of the float.

Five of the seven analysts surveyed rate the stock at Buy or Strong Buy; none recommends selling shares. The mean price target represents more than 21 percent potential upside and would be another multi-year high. Over the past six months, the stock has easily outperformed the likes of Nationstar Mortgage Holdings (NYSE: NSM), as well as the broader markets.

Radian Group

This private mortgage insurance company saw its share price surge in August after a report of declining delinquencies. The stock reached a 52-week high earlier this month but has fallen about 22 percent since then, due in part to a negative article in Barron's. The company is headquartered in Philadelphia and has a market cap near $550 million. The long-term EPS growth forecast is only about five percent, and the return on equity is in negative territory. Radian has a dividend yield of about 0.3 percent.

Short interest has been rising since September and now is more than 24 percent of the float. Perhaps not surprisingly, none of the nine analysts polled recommend buying shares. Yet the mean price target is more than 14 percent higher than the current share price, likely due to the sharp pullback in the past few weeks. Still, the stock easily outperformed competitor MGIC Investment (NYSE: MTG) and the broader markets over the past six months

Walter Investment Management

Shares of this loan servicing and mortgage investment company also have pulled back from a multi-year high, about 15 percent since the beginning of this month. But the stock is still up more than 112 percent from six months ago. The $1.4 billion market cap company is headquartered in Tampa, Florida. Its long-term EPS growth forecast is only about six percent and the return on equity is in the red. The forward earnings multiple is in the same ballpark as the industry average P/E ratio. Short interest is more than five percent of the float.

But five of the six analysts surveyed recommend buying shares; two of them rate it at Strong Buy. The analysts feel shares have some room to run as their mean price target indicates potential upside of more than 18 percent. That is a level the stock has not seen since 2008. Over the past six months, the stock has underperformed Ocwen but outperformed Nationstar.

Posted-In: Flagstar Bancorp Huntington Bancshares mgic investment Nationstar Mortgage Holdings Ocwen FinancialLong Ideas Short Ideas Trading Ideas Best of Benzinga

 

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