Stick With a Proven Winner in Countrywide

This column was originally published on RealMoney on Nov. 17 at 10:36 a.m. EST. It's being republished as a bonus for TheStreet.com readers.

Quick question: What do you ask yourself about a stock in your portfolio that has gone up 18.5% year to date and has appreciated at a compound annual rate of more than 20% for the past 25 years? Well, besides wondering why you don't own more of it, two ideas come to mind.

First, after the stunning price appreciation, how expensive is it? Second, is the underlying growth likely to continue?

You may be surprised to learn that, despite the heady share-price gains, Countrywide Financial (CFC Quote) trades at only 8.4 times consensus 2007 EPS estimates. This is well below the 2007 P/E multiples of 13.2 for Wells Fargo (WFC Quote), 10.5 for Washington Mutual (WM Quote) and 12.0 for J.P. Morgan Chase (JPM Quote). These are, in order, the top four U.S. residential mortgage originators for the first half of 2006, from Countrywide at No. 1 to J.P. Morgan Chase at No. 4. ...