I have been a big advocate for Business Development Companies this year for myriad reasons. My favorite in the space is Hercules Technology Growth Capital (HTGC). I have recently come across another similar compelling name in the sector with an 11% yield, Horizon Technology Finance Group (HRZN,) that seems to have had some key catalysts in recent weeks.
Key recent catalysts for HRZN
- It was initiated as an "Outperform" at Raymond James Thursday morning.
- Its recent offering of unsecured notes was oversubscribed and it raised money at just over 7%.
- It offered a positive portfolio update earlier in the month.
Horizon Technology Finance Corporation (HRZN) - "Horizon Technology Finance Corporation, a specialty finance company, primarily lends to and invests in development stage companies in the United States. It provides loans to the companies operating in life science, healthcare information and services, and cleantech industries". (Business Description from Yahoo Finance)
4 reasons HRZN provides compelling value for income investors at just over $16 a share:
- It offers a robust yield of just under 11% and has doubled its distribution payments over the past 2 ½ years.
- Insiders have been net buyers of the shares over the past 9 months.
- Analysts project revenue growth in low teens for FY2012 and FY2013 and the company has easily beat earnings estimates two of the last three quarters, it met expectations the other quarter.
- The stock has a forward PE of just over 10, and is selling at just 97% of book value.
Disclosure: I am long HTGC.