OFG Bancorp (OFG) is our quick stock pick of the week based on our investment research. Since making the Most Attractive Stocks list for December, OFG Bancorp’s stock price has increased nearly 8%. OFG has high quality earnings along with a cheap valuation, which earns it our Very Attractive rating.
Even at its current price of ~$16/share, OFG has a price to economic book value (PEBV) ratio of 0.6. This ratio implies that the market expects OFG’s after-tax profit (NOPAT) to permanently decline by 40%. OFG has grown NOPAT by 38% compounded annually over the last four years.
While growth appears relatively modest through 2014, the expectations implied by OFG’s stock price are too low and do not coincide with the actual economics of the business. Investors who know this will be able to profit when the market readjusts its expectations for OFG Bancorp.
Kyle Guske II contributed to this report.
Disclosure: David Trainer and Kyle Guske II receive no compensation to write about any specific stock, style, or theme.