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JimVanMeerten (56.04)

Is Taxi positioned for the recovery?



April 07, 2011 – Comments (1) | RELATED TICKERS: MFIN

This morning while using Barchart to screen for smaller stocks hitting the most frequent new highs I came across the chart of Medallion Financial (TAXI).  I never heard of this company but the business plan is unique.  As the economy recovers travelers will be using taxis, trying to find financing to open new businesses and the general consumer will be buying more toys -- RVs, boats, motorcycles.  If that happens this is a company that will benefit.

Medallion Financial Corp (TAXI), through its subsidiaries, operates as a specialty finance company in the United States. The company engages in originating, acquiring, and servicing loans that finance taxicab medallions and various commercial businesses. It also originates consumer loans for the purchase of recreational vehicles, boats, motorcycles, and trailers, as well as provides other debt, mezzanine, and equity investment capital to companies in various industries. In addition, the company originates commercial loans that finance the purchase of the equipment and related assets necessary to open a new business or the purchase or improvement of an existing business; and loans to small businesses for the purpose of financing inventory and receivables. Further, it raises deposits and conducts other banking activities. Medallion Financial Corp. was founded in 1995 and is headquartered in New York, New York.

Technical Factors:

1 - 80% Barchart technical buy signal

2 - Trend spotter buy signal

3 - 15 new highs and up 15.99% in the last month

4 - Relative Strength Index 74.50% and rising

5 - Trades around 8.95 with a 50 day moving average of 8.13

Fundamental Factors:

1 - Wall Street is barley following this one

2 - Sales projection not great but earnings are expected to increase by 35.30% this year, 6.20% next year and continue by 10.00% annually for the next 5 years

General Investor Sentiment:

1 - Wall Street may not be following this stock but 141 investors on Motley Fool are

2 - CAPS members vote 96 to 6 that the stock will beat the market

3 - The All Stars vote 38 to 1 for he same resultIf you think the economy is on the mend and looking for a niche finance institution this might be one to put on your watch lists.

Jim Van Meerten is an analyst for  Marketocracy Capital Management.  He shares his knowledge and experience from over 40 years of investing in stocks, mutual funds and ETFs  in his daily blog -- Barchart Portfolio Blogs.

1 Comments – Post Your Own

#1) On April 13, 2011 at 9:00 AM, volskew (< 20) wrote:

Have you looked at the valuation of the assets they are lending against?  They are lending money against taxis, which currently have a negative yield.  The parabolic rise in taxi prices has been great for them, but it's nieve to think that a market where financing of new assets is being done at near 100% and the terms are non-economic (negative yield) can be sustainable.  With rates where they are now, this could continue (always diffcult to call a top in a bubble) for a short while, but higher rates will bring a pop sooner.  As for the idea that economy rebounding will be good for the taxi business - they are running near capacity as it is and there is no room for growth - additional medallions issued (which is a considerable risk, in my opinion) will only destroy the value of their current collateral.

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