It might sound somewhat defeatist, but in a year like 2015, I’m just happy that my entry in the Best Stocks contest is almost in the black. It’s not that I don’t expect Prospect Capital (PSEC) to deliver solid returns. In fact, I expect it to deliver returns of 50% or more over the next 12 months. It’s just that 2015 has been one of those years when cheap value stocks have a way of getting cheaper. With a little over one quarter to go, let’s revisit Prospect Capital and why I still believe that winning the contest this year is a very real possibility.
I’ll start with valuation. With the single exception of the 2008 meltdown, Prospect Capital is the cheapest it’s ever been based on the price/book ratio. Prospect trades for just 77% of book value. Under normal conditions, you would expect Prospect to trade at a slight premium to book value. After all, management expertise and access to cheap capital are worth something. At current prices, the market is implicitly saying that book value is either overstated by 23% or that it expects management to destroy a lot of value in the months to come.
Source: Charles Sizemore
Related Articles:
- 7 High-Yield REITs With Growing Dividends
- 26 Income Securities For A Well-Rounded Asset Allocation
- International Diversification May Be Closer than You Think
- 10 Small/Mid-Cap Dividend Growth Stocks Answering The Call
- Free Cash Flow Payout vs. Dividend Payout
________________________________________________________________
Subscribe to:
Post Comments (Atom)
Popular Posts Last 30 Days
-
There’s nothing more satisfying that getting money for doing nothing. That’s why dividend stocks hold so much appeal for portfolios. Many of...
-
We've broadened our search to the S&P 500, and also found two high-dividend stocks among the dividend yield leaders of that larger i...
-
Dividend stocks can be a great source of passive income. Not only do they deliver cash into your brokerage account on a recurring basis, but...
-
I believe in dividend growth investing and consider holding strong companies will help me going through any stock market storm. I believe di...
-
Generally speaking, the higher the yield, the higher the risk involved. Since yield is a function of share price, a failing business model w...
-
With bond rates already low and the Fed hinting at rate decreases, dividend stocks are in high demand these days, as alternatives in the fix...
-
If you are retired, you have likely shifted from building your nest egg to living off your assets. That means you probably gravitate toward ...
-
What kind of income-generating assets make the most sense? Obviously, those that appear undervalued with respect to the basket/group of stoc...
-
Warren Buffett famously quipped that if you aren't willing to own a stock for 10 years, you shouldn't think about owning it for 10 m...
-
REITs are reporting higher revenue and earnings so far for the quarter. But one of the specific metrics for profitability comes from the rat...
0 comments
Post a Comment
Post a Comment