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3 Reasons to Invest like a Sniper in Park National Corp.

by
January 10, 2014 1:46 pm
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A tactic for snipers is to target the cross hairs at a certain spot. When the target crosses into the crosshairs, it is acquired. That is a good tactic to use for dividend paying stocks such as Park National Corp. (NYSE: PRK).

Around since 1908, Park National Corp. is a midwestern small cap bank that is headquartered in Newark, Ohio.

Any investor has to be pleased and impressed by any bank that survived both The Great Depression and The Great Recession. That stability is very appealing for long term shareholders. It clearly demonstrates that Park National Corp. has a sound business model and a solid management.

That leadership team also has respect for its shareholders.

This is clearly demonstrated by the 4.45% dividend yield. By contrast, the dividend yield for JP Morgan (NYSE: JPM) is 2.59%. For Wells Fargo (NYSE: WFC), Warren Buffett’s favorite bank, it is 2.65%.

Park National Corp. also has healthy financials.

The profit margin is 28.60%. Park National’s return-on-investment is 23.80%. That is an important indicator as it measures the efficiency of a company and how well it performs for the investor. JP Morgan’s return-on-investment is 6.70%. The return-on-investment for Wells Fargo is 9.90%.

Here is where the sniper’s tactic of setting a target and then pulling the trigger come enters.

At present, Park National Corp. is trading around $83 a share. Back in July it was at $65. It is close to its 52-week high. The target price from the analyst community is $80. There is a short float of 4.96% (5% is considered to be troubling). It has an above average beta of 1.22, so the price moves up and down over 20% more than the stock market as a whole.

Those all suggest the stock could fall in price.

As such, an investor might consider setting a target dividend rate of 5%. When that happens through either the share price dropping or management raising the dividend, that could be the time to buy for Park National Corp. The company is profitable, has been around over a century, and there is some recent insider buying. Those are all bullish for the future. Buying Park National Corp. on the dips could make for a rewarding long term total return for the shareholders.


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