Banking

IBD 50 Stocks To Watch: Bank Play Set To ‘Grow Rapidly In Good Times And Bad’ Eyes Entries

Western Alliance Bancorp (WAL) is the IBD 50 Stocks To Watch pick for Thursday as it eyes multiple buy points. The firm is seeing earnings accelerate, and an analyst has said it is positioned for rapid growth whatever the economic environment.




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The firm offers range of deposit, lending, international banking and online banking products through its banking subsidiary, Western Alliance Bank. It operates in a variety of regions, including Arizona, Nevada and California.

Brands include Alliance Bank of Arizona, Bank of Nevada, Torrey Pines Bank in Southern California and Bridge Bank in Northern California.

Stocks To Watch: WAL Analysis

WAL stock is forming a consolidation with an entry of 109.94, according to MarketSmith analysis. This is a second-stage pattern, which IBD research shows are more likely to succeed.

The stock is also offering up an aggressive trend line entry of near 102.40. Given the current choppy market conditions, conservative investors may prefer to wait for the stock to pass its conventional buy point.

The relative strength line has been mildly declining of late. Investors will want to see this benchmark, which gauges a stock’s performance compared to the broader S&P 500, improve.

Earnings are a key strength, with the stock holding a near-perfect EPS Rating of 98. Earnings have grown by an average of 110% over the past three quarters. This is more than four times the 25% growth sought by the CAN SLIM cognoscenti.

Trends are positive here, with earnings accelerating for the past five quarter in succession.

One factor not in the stocks favor is institutional ownership. The stock boasts an Accumulation/Distribution Rating of E. This represents heavy selling over the past 13 weeks.

In the most recent quarter, Western Alliance continued its impressive growth trends, and showed added benefit from its recent acquisition of AmeriHome. Western Alliance closed the deal to acquire the mortgage company in April. Based on the firm’s AmeriHome’s closing balance sheet and a $275 million premium, the deal was priced at approximately $1.22 billion.

Analyst Backs WAL Stock

Wedbush Securities analyst David Chiaverini is rating Western Alliance stock as outperform with a 130 target. He said the firm has demonstrated that it is “well-positioned to grow rapidly in good times and bad.”

“We expect the company to continue to generate above-average growth in earnings, loans, and deposits, and accretes capital at a very high pace which results in strong tangible book value growth,” he said in a research note. “WAL trades at 10.5 (times) our 2022 EPS estimate, which is a modest discount to peers trading at 10.7 (times) despite the company’s above-average growth outlook.”

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