As many readers are aware, each month writers of the Motley Fool are asked to submit their top pick for the coming month. For the month of November, my selection was Home Capital Group Inc. (TSX:HCG), and I am very happy to report that it was an excellent month with shares closing November at $16.83.
Shares of the alternative home lender began the month at $14 and increased by a total of 20.2%, as quarterly earnings of $0.37 per share were announced during the month. After putting a lot of the bad news into the history books, the company has proven that it is possible to move past the negative headlines and return to profit. As is usually the case when a company’s actions which are less than appropriate are reported in the news, the investment community has a lot to say about it for a period of weeks or months until things eventually die down.
Although earnings throughout the month could have gone either way, investors need to remain patient and think about the future when making this investment. For those wondering if it is still potential to make a profit from the stock, the answer is yes.
At a price near $17 per share, the company is turning a quarterly profit and has yet to resume the dividend. The benefit this offers to investors is the ability to purchase and hold shares, which are trading at a 23% discount to tangible book value. As of the most recent quarterly financial reports, the tangible book value per share is no less than $22.20, which will now be increasing in every quarter moving forward, as the company continues to report quarterly profits.
As a financial services company in the very well established mortgage market, investors should not be surprised by the consistency of revenues in each quarter. Shareholders can go to sleep each night knowing that interest is accruing to Home Capital Group with every passing day. Tomorrow is a new day!
For those seeking an investment in another company that has experienced a major PR blunder over the past few years, shares of Chipotle Mexican Grill, Inc. (NYSE:CMG) may have finally bottomed at a price of $265 and could be ready for another bull run.
The company had a major health scare close to two years ago and almost made it to the 18-month mark without any health-related issues in the news. Several months ago, however, an isolated incident in one restaurant put the company back in the news and took away any momentum that had been accumulated in well over a year.
Although many investors have been burned by this security, those willing to remain patient for consumers to return to Chipotle may be in for a huge profit.
To read the top stocks of the month for December, please click here.