01-17-2004, 01:51 AM
Their PE is a tiny discount compared to the S&P. They're trading at 17x 04 EPS. But that doesn't matter. Mortgage companies trade at bigger discounts to that. Doesn't mean they are more attractive. What matters is how they are trading now compared to their history. I have no idea what kind of multiple H-D typically trades at, so I don't know if they are cheap now. Regarding mortgage companies, CFC as one example trades at like 6x 04 EPS AND CFC pays a better dividend yield than the shitty .5% that H-D pays. (and CFC typically trades at something between 8x and 12x Harley has grown fast? Mortgage debt has grown 30% faster than GDP for the last 30 years. Over the last 10 years, Mortgage companies have grown EPS at twice the rate of the S&P with less volatility. Over the past couple years, it's been even better.
Economy is picking up, rates will increase, refinances will decrease, so mortgage originations aren't going to be as good. So people look at Countrywide and sell them because they lose their $18/share in EPS from originations. But people don't realize that as that drops off, they gain about $14 in servicings, and built a great hedge against rates.
Another good bet in mortgage right now is mortgage insurers (PMI) since as the economy picks up, people feel more confident, take on more debt, need to mortgage insurance, and with a pickup in the economy, they have less defaults. ALSO, higher rates tend to lead to more variable rate mortgages, which has higher margins than fixed rate mortgages.
And BBAN is a dogshit stock.
And building new plants causes depreciation & other startup costs, which depresses earnings, douchehead.
Edited By Galt on 1074304905
Economy is picking up, rates will increase, refinances will decrease, so mortgage originations aren't going to be as good. So people look at Countrywide and sell them because they lose their $18/share in EPS from originations. But people don't realize that as that drops off, they gain about $14 in servicings, and built a great hedge against rates.
Another good bet in mortgage right now is mortgage insurers (PMI) since as the economy picks up, people feel more confident, take on more debt, need to mortgage insurance, and with a pickup in the economy, they have less defaults. ALSO, higher rates tend to lead to more variable rate mortgages, which has higher margins than fixed rate mortgages.
And BBAN is a dogshit stock.
And building new plants causes depreciation & other startup costs, which depresses earnings, douchehead.
Edited By Galt on 1074304905