If you've been reading me for any amount of time, you know that I always stress the importance of buying a growth stock in the early stages of a move. The big money isn't made by chasing performance, it's made by focusing on new issues with strong fundamentals that are just starting to get discovered by growth-fund managers.
In the financial sector, large-cap names like Goldman Sachs (GS), JPMorgan Chase (JPM) and Morgan Stanley (MS) continue to show relative price strength, but they've moved a lot already. Buy now and you'd be chasing.
The good news is that one IPO in the financial sector looks ripe for higher prices.
EverBank Financial (EVER) went public in May at $10. As of Nov. 5, 2012, the Florida-based bank operated 17 financial centers in Jacksonville, Naples, Ft. Lauderdale and Tampa.
Recent acquisitions have boosted its commercial-loan business. In October, Everbank bought Business Property Lending, a unit of GE Capital Real Estate, for $2.4 billion. Now called EverBank Business Property Lending, the unit provides commercial loans for properties owned or leased by small- and mid-sized businesses.
Everbank has also been busy bulking up its retail operations. It's been a costly move, but one that should continue to boost earnings and sales growth in coming quarters. When the company reported third-quarter results in October, profit rose 48% from a year ago to $0.31 a share. Sales growth accelerated for the second-straight quarter, rising 31% to $258.6 million. In the third quarter, net interest margin fell to 3.66% from 3.86% in the second. Investors will look for some improvement here when Everbank reports earnings Jan. 30 after the close. Profit is seen rising 32% from a year to $0.33 a share with sales up 27% to $261.4 million.
At the end of the third quarter, the bank boasted $16.5 billion in assets and $11.8 billion in deposits.
Fundamentals look good at EverBank and its technical picture is equally impressive. Trading has tightened up in recent days and shares remain under accumulation. EverBank is currently working on a second-stage base. Recent price and volume trends in the stock are bullish enough where I wouldn't be surprised to see EverBank try for a breakout soon over its all-time of $16.22. Shares closed Wednesday at $15.60, up 0.6%.
We're eyeing Everbank for inclusion in the Ultimate Growth Stocks model portfolio. To see what the current model portfolio looks like, e-mail me at firstname.lastname@example.org. I'll send you a sample copy of my newsletter.