The Long Case for Sierra Bancorp

Aug.22.06 | About: Sierra Bancorp (BSRR)

Last week, I highlighted my growth screen and promised a follow up on each stock if possible. I've chosen to analyze Sierra Bancorp (NASDAQ:BSRR), which offers various banking services to individuals and businesses primarily in the central and southern sections of California’s San Joaquin Valley.

Catalysts that make BSRR a potential buy:

  • BSRR's EPS growth for this quarter relative to the same quarter a last year was 38.89%. Furthermore, growth from Q4 to Q1 beat estimates, for this year and next, by more than 25%. This bodes well for BSRR.
  • BSRR has had an annual earnings growth rate over the past five years of 21.32%. BSRR's annual EPS before extraordinary items for the last 5 years were 0.75, 0.91, 1.03, 1.31, 1.56. Constantly increasing, another positive
  • When considering a growth stock, I like to keep an eye open for stocks that are trading within 15-20% of their 52-week highs, as the stock price is potentially close to breaking out to a new high on above average volume. BSRR's current stock price, $31.41, is within 15% of the 52-week high 33.37. (I belong to the Buy High, Sell Higher cohort! thanks to Will O'Neal, IBD Founder)
  • In my growth list, a criteria was RSI of at least 80 (as I wanted to screen companies with recent strong momentum). BSRR's relative strength trend has been increasing over the last 4 months. BSRR's relative strength of 80 is at an acceptable level and price action is favorable.
  • I believe up to 40% of stock picking is sector. Like they say, "A good house in a bad neighbourhood is still bad, and vice versa." By screening the Regional Banks sector, I noticed there are 50ish companies that have a relative strength at or above 80 and is one of the top performing industries.
  • For my growth screen, another criteria was high insider ownership. Investors like to place their bets on companies where the management has a big stake in the company (Reminiscent of the Gordan Gekko Speech during Teldar Paper shareholder meeting). Insiders own 36% of BSRR's stock. (Gordon would be proud!)
  • BSRR 1-yr Chart



    Disclosure: I do not own the stock