HOME CAPITAL GROUP INC. $79 - Toronto symbol HCG

HOME CAPITAL GROUP INC. $79 (Toronto symbol HCG; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 34.7 million; Market cap; $2.7 billion; Price-to-sales ratio: 2.2; Dividend yield: 1.4%; TSINetwork Rating: Average; www. homecapital.com) specializes in loans to borrowers who don’t meet the stricter standards of larger, traditional lenders, like banks.

Low interest rates continue to fuel mortgage demand. As a result, the company’s earnings rose 15.2% in the third quarter of 2013, to $1.90 a share from $1.65 a year earlier. Revenue gained 5.7%, to $239.4 million from $226.6 million. Moreover, bad loans were just 0.32% of the company’s total loans, down from 0.33%.

Home Capital Group is a buy.

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Blue chip stocks are big, well-established, dividend-paying corporations with strong business prospects. These are companies that also have sound management that should be able to make the right moves to keep competing successfully in a changing marketplace.

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One of the sweetest and most profitable pleasures of successful investing is to buy high-quality “value stocks” (or stocks that are reasonably priced, if not cheap, in relation to its sales, earnings or assets), then hold on to them as mainstream investors recognize the value and push up the share price.

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