Invest in Intervest?
It’s been a rough couple of days for financial stocks this week but I think there are still some hidden gems. Despite the negative sentiment towards anything financial-related today, there were a few bright spots — one of them called Intervest Bancshares (NASDAQ: IBCA). IBCA ended the day up 10% at $2.86 on almost 6x average volume.
IBCA poses an interesting and somewhat unique opportunity. They boast a book value of about $23 per share and have been profitable in the last 4 quarters — which have been extremely tough on all banks. It’s hard to imagine any bank squeezing out a profit in this economy and yet, they’ve been able to do just that. This shows me that they have a pretty good management team in place. IBCA has a P/E ratio of 6 which is incredible considering that their book value is $23 yet trades at a mere $2.86 per share. Almost too good to be true right?
But there are some risks to consider as well. The commercial real estate defaults have been on the rise and has been slower to level out than residential real estate. It’s been really tough for commercial lenders and IBCA is no exception. Yes, they’ve been able to turn out small profits in the last few quarters but if businesses continue to default on their commercial mortgages, IBCA won’t be able to weather the storm forever.
With that said, I think the risk is very much worth the reward. I bought some IBCA yesterday and today at around $2.60. It’s still early to get into this stock because it hasn’t really had the run-up that many smaller banks have had lately. But once this stock gets some attention, the potential is definitely there with very strong fundamentals to support it.
