By coinnews 
00:00 Speaker A
It’s a big noisy universe of stocks out there. Welcome to Goodbye or Good Buy. Our goal to help cut through that noise to navigate the best moves for your portfolio. Today we’re taking a look of growth prospects for some Nasdaq names. I’m here with Commerce Street Holdings CEO, Dory Wiley, who is here with us in the studio. Special treat because usually we talk to you remotely Dory. So thanks for being here. Let’s get to the stock that you like. It is called Enterprise Financial Services. It is a regional bank based in St. Louis. We’re looking at the one-year chart here. And over the past one year, it’s actually up 36% or so, although it’s dipped a little bit this year. So let’s get into it and why you like it. First of all, you say it is undervalued growth here. Talk me through what that means in this case.
00:53 Dory Wiley
Absolutely, investors always looking for growth at a reasonable price, right? And that’s what this stock gives you especially in the banking sector. It’s a very solid company. They’ve got really good growth, 15 to 16%. Tangible book value per share or earnings per share growth, year in year out, and they’re they’ve just got a great track record of it and they’re only at 10 times forward PE which is much below its peers. So, it’s got a faster growth rate than its peers. It’s it’s a great value.
01:40 Speaker A
Gotcha, even with that rally still at that 10 times. Um, and when you look at the margins, and talking about a a regional bank, some of them are really indexed to loans or really index to the consumer. But you say this one has diversified revenues. So what does that picture look like?
02:02 Dory Wiley
Well they’re also in wealth management and other sources. And their loans are very diversified. Their loan book is much diversified. So some banks are over concentrated in real estate or commercial or whatnot. They’re extremely diversified. And that’s key for banks, because they’re leveraged institutions and everything’s about credit. This bank’s got a great credit underwriting group and yet they have above margins, well above margins for their peers and uh this diversified revenue makes them a safe choice in banking which is key because they are cyclical.
03:06 Speaker A
Gotcha. Alright. And then finally, defensive positioning here within the assets that they hold. So what does defensive mean in this case?
03:22 Dory Wiley
Okay, so I just talked about it being defensive on its credit underwriting, balance sheet structure. Yes. They have a way above average amount of tangible equity capital, above 9%. JP Morgan for example, runs maybe 7 and a half percent. So this is a very safe bank, yet it’s growing. So think about when things get ugly, let’s assume that there’s a recession, other banks have to pull back back, this bank can not only expand, but can define credit terms in the market. That makes it a really good all weather stock, up and down markets.
04:30 Speaker A
And just curious, it’s not on our three points here but where is that growth coming from for the bank? Is it in loans, is it in wealth management? Is it all of the above?
04:43 Dory Wiley
It’s it’s all of the above. They got great 8% loan growth year over year so it’s consistent and not exorbitant, but the markets they’re in, it’s not just a St. Louis bank, it’s in Texas, it’s in other markets in the south. And so it’s it’s growing actively in those markets and in good markets that have growth.
05:10 Speaker A
Gotcha. So even for these picks, we like to say what what could maybe go wrong or what’s the risk? You say an industry cyclical trading out of favor. So what does that mean?
05:24 Dory Wiley
The biggest, the biggest risk to this stock is not the company itself, it’s the sector, it’s banks. So the stock could go down. I think you just weather it or you buy more.
05:40 Speaker A
Gotcha. Alright. Now let’s get to the stock you don’t like as much and that is Wingstop. Good thing we’re past the thick of uh football season although I guess wings are an all year round item here. Now, this stock is down about 14% over the past 12 months, but it has bounced a little bit uh year to date to some extent, just with this latest move upward here. Um, but contrary to your other pick, you say this one is is too rich for your blood.
06:20 Dory Wiley
It’s almost just the opposite of Enterprise Financial. This is a wonderful company and a wonderful management team, doing a great job, so I’m not stepping on the company. It’s the valuation. The valuations at 65 PE at an 18% growth. When we just talked about a company at 10 forward PE at 15 to 16% growth. I think that’s too much. And you don’t see that in restaurants and they and they’ve talked about, you know, a slowing growth rate, slowing metrics. So this this metric is just way too high for what it is. Nothing against the company, it’s just the stock.
07:42 Speaker A
Gotcha. Okay, and but let’s talk about that growth piece of it that you just mentioned here. Um, you know, in a time when the consumer sentiment surveys are not looking so great. So what’s the growth profile here?
08:03 Dory Wiley
If anything goes wrong, this stock is in trouble. It is a prima donna stock. Everything’s assumed to go correct. Well, last year had terrific growth, it’s done terrific. It’s got efficiencies, they’re very AI driven, their kitchens are super efficient, but there’s there’s not a lot of room for same store same store sales growth, which they even forecast to be way low this year, compared to what they’ve had in the past, yet the stock hasn’t priced that in.
09:01 Speaker A
Gotcha. And then finally, overbought signals. Now, as I mentioned the stocks down over the past year, but it’s had a pop year to date. So is that pushed it into overbought? It’s just sort of a technical.
09:19 Dory Wiley
Really it came up over 54% in the last 30 days. Sell it, take your profits, go somewhere else and buy something else and wait for this to come down again.
09:41 Speaker A
Okay, so when we talk about what could go right, I guess it’s waiting for it to come down again. If it comes down, how far would it have to come down, what other signals would you be looking for to maybe step back in?
10:01 Dory Wiley
You know, I would like to see it ought to be at least a 20 to 30 forward PE. Even because they plan on opening plenty of more stores. That same store sales growth is going to be tough. They could get it in the new stores, right? So if they can keep that pace going, then they’re going to keep a higher than average PE, but it shouldn’t be 65. So it maybe gets in the 30 to 40 range or something, I’m all over this stock.
10:44 Speaker A
Gotcha. All right. Dory, thanks so much. So and just quickly, do you have a position in Enterprise? You hold Enterprise?
10:56 Dory Wiley
Uh, definitely hold Enterprise. We’re bank investors and I don’t have one in Wingstop, but I did eat some dry rub wings last night.
11:11 Speaker A
Alright. That’s the best disclosure we have ever gotten, Dory. And Dory is going to stick around and join us a little bit later for broader market chat as well. Thanks so much for watching. Goodbye or Good Buy. We’ll bring you new episodes at 3:30 PM Eastern.