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Prospect Capital may be undervalued |
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at its current price. |
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Released on Friday, October 7, 2011, 8:00 AM ET
Pittsburgh, PA (SpeculatingStocks) - Prospect Capital Corporation (NASDAQ:PSEC) is a dividend, dividend, dividend stock! And we mean dividends, especially dividends which yielded 12.60% on average over the past 5 years, and could be as high as 14.50% for the months to come!
PSEC pays a dividend every month at the end of the month, and for the past few months has been giving investors 0.10¢ a share, and before that as much as 0.41¢ a share!
Now you may be thinking that there are nicer yielding dividend stocks out there—and you’d be right, except this is a stock under a small market capitalization of only around $952 million and currently trading at only $8.71 per share (4:00 PM EDT, October 6th, 2011). So it’s a high dividend yielding small cap. stock, but that’s not all.
Prospect Capital may also be undervalued at its current price. The company’s enterprise value is $1.3 billion: that’s roughly 48% higher than its market capitalization. If Prospect itself wasn’t a capital investment firm, it might soon have an aggressive acquisitions trader snatch it up at a discounted bargain.
Added to this the book value per share is currently $10.56, $2.61 per share above market prices. The company has a nice average volume of about 1.8 million shares on a daily basis, and with a volatility beta around 0.8 the company tends to move slightly less than the market. Fundamentals are also strong, and the company holds more long-term assets than current—leading to a total debt to asset ratio of 0.26, forming a stable basis.
Technicals show that the company recently went through a downward trend in stock price starting back in early April, 2011, and has just now begun to bottom out. The fast stochastic indicates that the stock’s demand is moving from oversold towards equilibrium. However, the stock may be continuing an upswing wave and ready to move into a downswing wave according to Elliot wave theory. MACD bands support the continuance of an upward swing as the MACD levels-out and the EMA approaches from above; Bollinger bands present a possible temporary decrease in the stock’s volatility as well.
With possible discounted price, reasonable probable future cash-flows, a steady foundation, and tempting technicals, this stock could be a nice addition to a DRIP, long-term, or income portfolio: perhaps a company to look into.
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