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The Impact of Local GDP Per Capita on the ROE of Crédit Agricole's Regional Banks

The Crédit Agricole group is not only the largest retail bank in France, but also the largest retail bank in the European Union. The Group consists of Crédit Agricole S.A., whose stock trades in the U.S. under the tickers (CRARY) and (CRARF), as well as a network of 39 regional Crédit Agricole banks, and a larger network of over 2,400 mutual banks. More than 11 million mutual shareholders own shares in the mutual banks, which themselves own shares in the regional banks, which in turn own over half the shares of Crédit Agricole S.A.

Of the 39 Crédit Agricole regional banks, 12 are publicly traded on European exchanges. Their shares have historically been cheap. One problem with investing in them, though, is deciding which ones to invest in. Since each Crédit Agricole regional bank operates in a different area of France with a different GDP per capita, I was curious if areas with higher GDPs per capita might have Crédit Agricole regional banks that earn higher returns. (Read More)

A Look At 'Gloomy Goldman's' 20 'Safety' Stocks

A recent Marketwatch article, titled “Gloomy Goldman offers 20 ‘safety’ stocks with valuations below the previous 2 bear markets,” listed 20 “safety stocks” that Goldman Sachs (GS) chief U.S. equity strategist David Kostin proposed for a potential downturn. According to Kostin, the companies are not only large and have strong balance sheets, they are also cheap:

'…[their] price/earnings multiple after a 20% haircut to expected 2023 earnings is below the forward p/e at the bottom of either or both of the March 2009 and March 2020 bear markets.

“Importantly, given the different real interest rate environments, the highlighted stocks are more attractively valued today on a yield gap basis relative to the rest of the index than they were in either 2009 or 2020,” said Kostin and the team.'

A stock that is cheaper than in 2009 and/or 2020 does sound cheap! In that context, I looked at the list...(Read More)

A Look At Why World Acceptance Corporation's Stock Is Outperforming Its Peers

World Acceptance Corporation (WRLD) is an installment lender that generally makes loans at higher rates of interest to people with weaker credit. The company’s stock has performed strongly since the end of 2020, rising by around 112%.

At first glance, it seems obvious why the company’s stock has gone up. When COVID struck the U.S., many lenders feared a wave of defaults as borrowers lost their jobs and got sick. One April 2020 US News article described how “financial institutions around the world are bracing for consumers and businesses to default on outstanding loans.” Once investors realized that wave of defaults wouldn’t materialize due to government stimulus and a quick end to lockdowns in many states, it makes sense they would start buying the stock of lenders such as World. Moreover, we’ve seen a bull market in the past year, so it makes sense World’s stock would rise at the same time.

Though these arguments make sense, once we compare World to some of its peers, it becomes less obvious that they are the reasons for the stock’s rise...(Read More).