Investment Jungle

I was so pleased with the results from my first stock pick, I decided to move down (or in my case - UP) the list and check the next company that came out of my Rule #1 stock screen - First Regional Bancorp.

Company Profile

From Yahoo Finance:

First Regional Bancorp operates as the holding company for First Regional Bank, which provides commercial banking services to professionals and business accounts in California. The bank accepts interest-bearing, demand, savings, and time certificates of deposit. First Regional Bank’s loan portfolio includes commercial, real estate, and real estate construction loans.

Needless to say, this is a bank.

Financial Analysis

Checking out the Big Five, they all meet the requirements of a solid moat. ROIC has been chugging along at over 10% per year for the last five years, and has been steadily increasing! Rule #1 investors love to see that ROIC grow and grow and grow.

The Equity Growth Rate has been very impressive at over 35% per year for the last four years. Five year average of 37.47% and a 10 year average of 28.31%.

Earnings Per Share Growth Rate has been absolutely phenomenol at over 60% for the last 4 out of 5 years. The last year came in at a healthy 41%.

Sales Growth Rate has been solid at just over 50% until the last year, where it dropped to 33%.

Cash Flow Growth Rate, as the trend seems to be, performed extremely well except that is has dropped off in the current year.

Overall, very impressive numbers with a great management steadily increasing the ROIC.

Stock Analysis

Let’s see how accurately my stock screen delivered an attractively priced business into our hands. I calculated the sticker price at$34.44 and an MOS price of $17.17. At close of Friday, FRGB was selling at $26. Once again, I successfully found a wonderful business that was priced below the sticker price, but not below the MOS price.

FRGB is currently selling at a discount of 24.5%. Not bad. Not bad at all.

Here is a summary of my findings.

Conclusion

Once again, my stock screen was able to find a relatively cheap valuation for a wonderful business. So I am very pleased with my screening process. I am a little disillusioned at the fact that it only produced 6 businesses to evaluate. I think I will have to play with the screen a bit to see if I can ‘loosen’ up the restrictions to bring in a few more companies.

I am starting to wonder that with the markets reaching all time highs on an almost daily basis, is it even possible to find a wonderful business selling at an attractive price? On the other hand, some buying opportunities MAY be coming up in the future, so we need to prepare our watchlist now so that we can be ready to POUNCE on the sales.

Popularity: 20%