Thursday, 22 December 2011

Carfinco - Stonecap's Top & Only Small Cap Pick For 2012

Carfinco Income Fund
TSX: CFN.UN
Units outstanding: 24.61 million
Units fully diluted: 24.65 million

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Jonathan Ratner published a piece today in the Trading Desk section of the Financial Post discussing 6 top picks from Stonecap Securities.

Something Carfinco and its unitholders can be proud of is that Stonecap believes outside of commodities, larger cap companies are more likely to perform than small cap companies with one exception...Carfinco.

“On the commodity front, we remain bullish on all things precious, both silver and gold, while believing that sustained food price inflationary pressure will lift agricultural company share prices as the year progresses,” the firm said. “Beyond commodities we believe larger rather than smaller capitalization stocks will outperform.”

Nonetheless, it included one small-cap non-bank financial that offers “a defendable and highly profitable niche.” That name is Carfinco Income Fund, which buys non-prime consumer loans secured by used automobiles.

Trading at 8.6x Stonecap’s 2012 earnings per unit forecast, the firm believes Carfinco remains an underappreciated story.

“The impressive yield, growth opportunities in future markets, and management’s ability to execute coming out of the credit crisis gives us great confidence about the fund’s prospects for the upcoming year,” analyst Dylan Steuart said in a report. He has a $10 price target on the stock.

Today's full article can be read by clicking here...