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I hope some of you bought RNF as I mentioned in a video earlier this month. It has steadily rose to over 21 bucks a share now. That is a 8% increase from when I recommended it. Hold both RNF and UAN, I feel they both have 35 dollars a share capability here in 2012, plus killer dividends.
I would like to focus on a stock in another area that I have highlighted here on the site, Business Development Companies. As I mentioned in my post that highlights BDC’s, BDC’s were created to help small to medium sized companies with oversight and capital that they would not be able to obtain from traditional sources. There is one specific one I want to highlight today.
Hercules Technology Growth Capital (HTGC) is the largest publicly-traded specialty finance company addressing the capital needs of venture capital and private equity-backed companies. They provide customized debt financing solutions to high growth, technology-related companies, including Cleantech, Life Sciences and select lower middle market companies to help them reach critical growth milestones at all stages of development.
I know some of you are thinking that with interest rates at an all-time low, and the economy in a poor condition that this stock has little to no upside. I’m going to tell you why I believe that is not the truth. Small businesses are growing here in America, along with a changeover to tech based companies. However traditional lending sources such as banks are making it very difficult for these companies to get loans. Hercules will give these companies that capital. The stock fell big here on January 20th, with an announcement that they will be created 5 million additional shares of stock. Don’t let this worry you.
Hercules has a book value of just over 10.50 a share, and are currently priced at 9.70 a share. They also pay a healthy quarterly dividend of 22 cents, which is close to a 9% yield. With earnings projections going up for HTGC, its time to jump in this BDC. See the chart below for HTGC over the past 6 months.
I am long HTGC.
Hercules Technology Growth Capital Article originally written on January 21, 2012.
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