A lot of my portfolio is in undervalued closed end funds now, but to make things more interesting I thought I would blog about a stock today.
I found a cheap, beaten down bank stock and bought some shares today. Temecula Valley Bank (OTC:TMCV) is based in California and specializes in guaranteed SBA loans. SBA lending can do well even in a weak economy and usually thrives in a low interest rate environment. I also think the bank has a pretty cool name.
Here are some things I like about TMCV:
- High return on equity (18.46%).
- Low price to book value (around 1.0)
- No subprime or alt-A exposure.
- Forward PE ratio= under 6
- Depressed by tax loss selling.
Mr. Market seems to be over-estimating the credit risk here, and tax loss selling is adding to the mix. I bought two lots in the 10.60 range, but I think anything under 11 is a good value.