- Several headline metrics look good at this bank
- But the business model is risky
- Plus a US logistics giant with a revised strategy
This week we look at very cheap bank stock which, judging by some metrics, looks to show some signs of promise. However, it’s important to take in the whole picture when assessing whether a risky deep value play may come good. We also ask if a US logistics company can improve its profitability and gain market share.
With a very basic analytical framework, it is possible to understand why the shares of specialist lender Secure Trust Bank (STB) are valued so cheaply by the stock market.
At its current share price of 654p, it trades on a one year forecast PE ratio of just 3.1 times and at a very big discount to its latest tangible net asset value per share of 1,746p.
These are the kind of valuations that have deep value and contrarian investors salivating. However, whilst the stock market can harshly treat companies it doesn’t like, a very cheap valuation is often a sign that there is a lot to worry about with a company.
If you read Secure Trust’s medium term financial targets then you will be forgiven for thinking that its shares are a screaming buy. But there is much more to consider in this week's full report.
We also look at a US logistics business with potential for strong earnings growth, but the quality and sustainability of earnings growth still has room to improve.
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