7 Thrifts and Mortgage Bank Stocks to Buy on Rising Interest Rates

NEW YORK (TheStreet) -- The better-than-expected May jobs report could bode well for financial stocks as investors now anticipate the Federal Reserve to raise interest rates in September.

The S&P 500 financial sector was one of two sectors that had the biggest gains on Friday, adding 1%. Rising interest rates means that banks can expand their profit margins on services like mortgages loans and other types of lending.

Here are seven thrift and mortgage finance stocks rated buy by TheStreet Ratings.

TheStreet Ratings, TheStreet's proprietary ratings tool, projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Based on 32 major data points, TheStreet Ratings uses a quantitative approach to rating over 4,300 stocks to predict return potential for the next year. The model is both objective, using elements such as volatility of past operating revenues, financial strength, and company cash flows, and subjective, including expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings.

Buying an S&P 500 stock that TheStreet Ratings rated a "buy" yielded a 16.56% return in 2014 beating the S&P 500 Total Return Index by 304 basis points. Buying a Russell 2000 stock that TheStreet Ratings rated a "buy" yielded a 9.5% return in 2014, beating the Russell 2000 index, including dividends reinvested, by 460 basis points last year.

Note: Research and ratings are as of June 7, 2015. Year-to-date returns are based on June 5, 2015 closing prices.

BOFI Chart BOFI data by YCharts

1. BOFI Holding Inc. (BOFI)
Market Cap: $1.5 billion
Year-to-date return: 22%

BofI Holding, Inc. operates as the holding company for BofI Federal Bank that provides consumer and business banking products through the Internet in the United States.

TheStreet Ratings: Buy, A
TheStreet Ratings said: "We rate BOFI HOLDING INC (BOFI) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. We feel its strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth greatly exceeded the industry average of 9.2%. Since the same quarter one year prior, revenues rose by 41.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • BOFI HOLDING INC has improved earnings per share by 35.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, BOFI HOLDING INC increased its bottom line by earning $3.85 versus $2.89 in the prior year. This year, the market expects an improvement in earnings ($5.18 versus $3.85).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Thrifts & Mortgage Finance industry. The net income increased by 44.2% when compared to the same quarter one year prior, rising from $14.61 million to $21.07 million.
  • The gross profit margin for BOFI HOLDING INC is currently very high, coming in at 78.75%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 29.56% significantly outperformed against the industry average.
ESSA Chart ESSA data by YCharts

2. Essa Bancorp Inc. (ESSA)
Market Cap: $129 million
Year-to-date return: 6%

ESSA Bancorp, Inc. operates as the holding company for ESSA Bank & Trust that provides a range of financial services to individuals, families, and businesses in Pennsylvania.

TheStreet Ratings: Buy, A
TheStreet Ratings said: "We rate ESSA BANCORP INC (ESSA) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and attractive valuation levels. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 9.2%. Since the same quarter one year prior, revenues rose by 16.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • ESSA BANCORP INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. During the past fiscal year, ESSA BANCORP INC increased its bottom line by earning $0.78 versus $0.76 in the prior year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Thrifts & Mortgage Finance industry. The net income increased by 61.9% when compared to the same quarter one year prior, rising from $1.50 million to $2.43 million.

 

HBCP Chart HBCP data by YCharts

3. Home Bancorp Inc. (HBCP)
Market Cap: $161 million
Year-to-date return: -0.43%

Home Bancorp, Inc. operates as the holding company for Home Bank that provides various banking services in Louisiana. Its deposits products consist of checking, interest-bearing and noninterest-bearing, money market, savings, and certificates of deposit accounts.

TheStreet Ratings: Buy, A
TheStreet Ratings said: "We rate HOME BANCORP INC (HBCP) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and attractive valuation levels. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 9.2%. Since the same quarter one year prior, revenues slightly increased by 8.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • HOME BANCORP INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, HOME BANCORP INC increased its bottom line by earning $1.42 versus $1.06 in the prior year. This year, the market expects an improvement in earnings ($1.68 versus $1.42).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Thrifts & Mortgage Finance industry. The net income increased by 98.7% when compared to the same quarter one year prior, rising from $1.43 million to $2.85 million.

 

 

JXSB Chart JXSB data by YCharts

4. Jacksonville Bancorp Inc. (JXSB)
Market Cap: $42 million
Year-to-date return: 0.22%

Jacksonville Bancorp, Inc. operates as the holding company for Jacksonville Savings Bank that provides various banking products and services in Illinois.

TheStreet Ratings: Buy, A
TheStreet Ratings said: "We rate JACKSONVILLE BANCORP INC/MD (JXSB) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, expanding profit margins and solid stock price performance. We feel its strengths outweigh the fact that the company has had somewhat weak growth in earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The gross profit margin for JACKSONVILLE BANCORP INC/MD is currently very high, coming in at 91.26%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 19.96% is above that of the industry average.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 9.2%. Since the same quarter one year prior, revenues slightly dropped by 2.6%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • The change in net income from the same quarter one year ago has exceeded that of the S&P 500 and the Thrifts & Mortgage Finance industry average. The net income has decreased by 6.4% when compared to the same quarter one year ago, dropping from $0.84 million to $0.79 million.

 

BRKL Chart BRKL data by YCharts

5. Brookline Bancorp Inc. (BRKL)
Market Cap: $784 million
Year-to-date return: 11.8%

Brookline Bancorp, Inc. operates as the holding company for Brookline Bank, Bank Rhode Island, and First Ipswich Bank that provide commercial, business, and retail banking services to corporate, municipal and individual customers.

TheStreet Ratings: Buy, A+
TheStreet Ratings said: "We rate BROOKLINE BANCORP INC (BRKL) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, growth in earnings per share, increase in net income and attractive valuation levels. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 9.2%. Since the same quarter one year prior, revenues slightly increased by 4.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • BROOKLINE BANCORP INC has improved earnings per share by 13.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, BROOKLINE BANCORP INC increased its bottom line by earning $0.61 versus $0.51 in the prior year. This year, the market expects an improvement in earnings ($0.68 versus $0.61).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Thrifts & Mortgage Finance industry. The net income increased by 12.3% when compared to the same quarter one year prior, going from $10.42 million to $11.70 million.

 

 

FCAP Chart FCAP data by YCharts

6. First Capital Inc. (FCAP)
Market Cap: $72 million
Year-to-date return: 8.5%

First Capital, Inc., a federally-chartered savings bank, operates as the bank holding company for First Harrison Bank that provides various banking services to individuals and business customers primarily in Harrison, Floyd, Clark, and Washington counties in Indiana.

TheStreet Ratings: Buy, A+
TheStreet Ratings said: "We rate FIRST CAPITAL INC (FCAP) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, growth in earnings per share, increase in net income and attractive valuation levels. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 9.2%. Since the same quarter one year prior, revenues slightly increased by 6.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 28.90% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, FCAP should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • FIRST CAPITAL INC has improved earnings per share by 12.8% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. During the past fiscal year, FIRST CAPITAL INC increased its bottom line by earning $2.04 versus $1.82 in the prior year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Thrifts & Mortgage Finance industry. The net income increased by 13.0% when compared to the same quarter one year prior, going from $1.30 million to $1.47 million.

 

PBIP Chart PBIP data by YCharts

7. Prudential Bancorp Inc. (PBIP)
Market Cap: $114 million
Year-to-date return: 6.2%

Prudential Bancorp, Inc. operates as the bank holding company for Prudential Savings Bank that provides various financial products or services in Pennsylvania.

TheStreet Ratings: Buy, A+
TheStreet Ratings said: "We rate PRUDENTIAL BANCORP INC (PBIP) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income, expanding profit margins, impressive record of earnings per share growth and solid stock price performance. We feel its strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth greatly exceeded the industry average of 9.2%. Since the same quarter one year prior, revenues rose by 39.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The gross profit margin for PRUDENTIAL BANCORP INC is currently very high, coming in at 81.39%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 27.03% is above that of the industry average.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Thrifts & Mortgage Finance industry. The net income increased by 217.9% when compared to the same quarter one year prior, rising from $0.54 million to $1.70 million.
  • PRUDENTIAL BANCORP INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. Stable Earnings per share over the past year indicate the company has sound management over its earnings and share float. During the past fiscal year, PRUDENTIAL BANCORP INC increased its bottom line by earning $0.20 versus $0.19 in the prior year.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.

 

 

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