Monday, 6 May 2013

Analyst Says Buy Carfinco Now – Is An Acquisition Coming?

TSX: CFN
Shares outstanding: 26.4 million

Shares fully diluted: 26.4 million
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In mid April, Carfinco announced closing its first equity financing since 2007, putting $17.3 million in the coffers at $9.75 a share with 1.771 million new shares being issued.

In the news of the financing closing, Carfinco mentioned that the funds would be used to reduce indebtedness, for general corporate purposes, and for potential future acquisitions. 

Analyst Fred Westra of Industrial Alliance today released updated coverage on Carfinco and he believes that not only should investors be looking to accumulate stock on the current price weakness, but he also has an expectation that the financing will be ultimately used in support of an acquisition.

Mr. Westra mentions in the report that he believes Carfinco is an excellent Company with sustainable ~20% loan growth; one of the best efficiency ratios in the lending space; superior capital allocation with an ROE of 52.2%; solid risk management; and a 5.8% dividend yield.  He urges investors to accumulate shares at this price and targets Carfinco at a conservative $11.50,  ~30% from where it is trading today.