Sterne Agee & Leach Analyst Brett D. Rabatin likes the growth prospects and profitability of underfollowed stock Hilltop Holdings Inc (HTH), as the company has become the fifth-largest bank in the Texas market in deposits and is a story that is likely to evolve.
“Another name I still really like…since we initiated on it this year, is actually Hilltop Holdings. Only a couple sellside analysts follow the stock. Ticker is HTH. It’s underfollowed, and I don’t think people, a lot of folks even realize it’s actually a bank,” Rabatin said.
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HTH used to be a mortgage REIT, Rabatin says, but since has wound that business down. Additionally, it has been misunderstood as an insurance company due to two insurance acquisitions, yet HTH has actually become one of the largest banks in the Texas market in deposits, and is likely to grow over the next three to five years.
“People have been worried about the mortgage contribution, but that’s really declined, and it’s a really profitable franchise. I like the growth prospects and profitability and how they are going to grow over the next three to five years. And then we are talking about a Gerry Ford vehicle, so at some point you could possibly expect a monetization of their investment. It’s also a name that still has some capital to deploy and it’s just — I think the story there will continue to evolve and consensus seems light to me this and next year,” Rabatin said.
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