The Sane Investor Pick for July 9th, 2008: Radian Group Inc. (NYSE: RDN)
July 09, 2008
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RELATED TICKERS: RDN
, DBO
The company, Radian Group Inc. (NYSE: RDN), essentially operates by insuring mortgages, mortgage structured products, and other credit-based risks including municipal bonds. Obviously, if you’ve been paying attention to the news, not a great industry to be involved in right now.
And investors have been thinking the same thing. The stock has declined a little less than 97% in the past year, and their credit quality has slipped to a measly BBB (above investment grade, but not exactly great news for an insurance company that needs a high rating to be able to do what they do successfully)...
So why the heck would I be pitching this stock?
Well, it has to do with the fact that I feel like this company is being priced like it’s going to go bankrupt, and I just don’t think that’s the case. According to Yahoo! Finance, the company has over 1.19 billion dollars in cash and only 1.06 billion dollars in debt, along with a Price to Book ratio of 0.04 ($35.64 of book value per share)...
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