There is more news today about foreclosures picking up pace since many legal obstacles seem to be coming to an end. This pace should quicken soon if the Obama administration does not put another roadblock in the path via some package to save delinquent homeowners. Frankly I believe we might have reached the point that blocking these foreclosures has run out of legal means to stop them. As I have posted earlier the best thing that could happen to the housing situation is for foreclosures to pick up pace which would allow the over inventory of homes to begin to come down via the buying up of foreclosures by investors and people looking bargains. So if you are an investor how do you take advantage of foreclosures and home inventory opportunities.
One is to invest in companies trying to keep people in their homes through means other than legal obstacles. I mentioned a stock last week Altisource, symbol ASPS, that offers the investor a chance to get into this business in a big way. ASPS helps find ways for homeowners to stay in their homes and lenders would much prefer this since they lose anytime a house is in foreclosure. ASPS has moved up smartly in the past year and just reported stellar earnings which resulted in another $5 pop, so buying here at a value price is critical. I would put this on my watch list and consider buying if it dips near of below $40. The PE is reasonable and the company just passed $1 billion in market cap which will put it on the radar of some investment professionals. If you are looking for a long term capital gain buy I recommend this stock highly.
Another company that might fit your investment idea to get into the home foreclosure upside is Dolan Company, symbol DM. Dolan has over the past few years reinvented the company from primarily a business and law publishing operation into a law and foreclosure servicing business. Dolan uses it's publishing side to do business with lending institutions and law firms when they need to publish the legal ad of foreclosure. Then it has a law firm specialty side that has software and expertise in knowing how to process the foreclosure itself. Dolan has been languishing as a company and stock for some time now as the expected foreclosures have not commenced due to legal holdups and government efforts to keep more people in their homes. Frankly there are huge backlogs of these foreclosures and once they commence Dolan should see a sizable share of this business and profits. The question is when and how long you will need to wait for this process to commence. Dolan stock could be an immediate move once foreclosures start or a long wait if they hold off awhile. But it is almost pure play on the foreclosure side. Dolan has a reasonable PE, but is a small company by market cap just over $250 million. This stock tends to be thinly traded so be careful if you decide to take a position.
I do not own ASPS or DM either long or as an derivative option. However I did work for Dolan as an employee and was assigned employee stock options prior to Sept. 2008. I no longer own any stock or stock options in Dolan. I also have no inside information on the company. I am not recommending Dolan and this posting on DM is only for informational purposes.
No comments:
Post a Comment