HOME CAPITAL GROUP INC. $50 - Toronto symbol HCG

HOME CAPITAL GROUP INC. $50 (Toronto symbol HCG; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 70.1 million; Market cap; $3.5 billion; Price-to-sales ratio: 3.5; Dividend yield: 1.6%; TSINetwork Rating: Average; www.homecapital.com) caters to borrowers who don’t meet the stricter standards of traditional banks. Its clients include recent immigrants with limited credit histories, and the self-employed.

However, Home Capital continues to do a good job of identifying problem loans early and adjusting the payment terms. That keeps its loan losses down.

In the three months ended September 30, 2014, earnings rose 10.5%, to $1.05 a share from $0.95 a year earlier. Revenue gained 6.5%, to $255.0 million from $239.4 million. Bad loans were just 0.27% of the Home Capital’s total loans, down from 0.35%.

The company has also raised its dividend by 11.1%. The new annual rate of $0.80 a share yields 1.6%.

Home Capital is a buy.

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