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My scope is to assist private companies both abroad and domestic wishing to go public in the U.S. We invest in the company in the earliest stages, and assist in coordinating their audit, legal RTO or IPO. We also offer M&A identification, execution and consulting, Investors relations... More
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  • FRF And HCAP: Buying These Low Book Value, Growth Stocks Could Be Rewarding 0 comments
    Jun 23, 2014 11:33 AM | about stocks: FRF, HCAP

    In these days of key indices creating new highs, it is becoming increasingly difficult to find outright undervalued stocks. The next best option for investors is to focus on companies that have a proven track record of profitability. It would be a bonanza for investors to get such stocks close to book value. Fortegra Financial Corp (NYSE: FRF) and Harvest Capital Credit Corp (NASDAQ: HCAP) are such stocks which can reward investors handsomely when the value unlocks. Here is a closer look to see if it is the right time to nibble into these stocks.

    Florida based Fortegra Financial Corp is an insurance services company that offers credit insurance, debt protection, warranty contracts, motor club solutions and membership plans. The company's business has grown at a healthy rate in recent years. In the most recent quarter, the company reported 16.5 percent jump in earnings, translating to earnings per share of 14 cents. Although this was not bad, investors were expecting the company's earnings to be around 16 cents per share. Since it was not a big miss the stock was not hammered, but it continues to trade at double-digit discount to its January levels.

    At the same time, the stock offers a whopping 13 percent discount to its book value of $8.4 per share. At 59 percent, the discount is even higher on the price by sales ratio. The company has a healthy balance sheet with a debt equity ratio of just 0.3 and the shares are a bit undervalued, if not outright steal, at a forward price earnings ratio of 9.6.

    Harvest Capital Credit Corp is another undervalued financial services player. Harvest Capital Credit is a management investment company providing structured credit to privately held small and mid-size businesses. One of the major attractions of this stock is the excellent 9.5 percent annual dividend yield, although the stock does not skimp on rewarding investors with capital gains.

    During the latest quarter ended March 31, 2014, the company reported net investment income of $2.1 million, up from $764,942 in the same period of last year. The stock moved up following the earnings announcement, but still trades below its book value of $14.7 per share. This is an important indicator of shares being undervalued as the company is debt free. Analysts at Keefe, Bruyette & Woods have put a price target of $16 on the stock, reflecting potential upside of over 12 percent. Trading at a forward price earnings multiple of 8.9, the stock is very attractive for its dividend as well as from valuations standpoint.

    Stocks: FRF, HCAP
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