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5 Reasons Why Sallie Mae (SLM) is an Attractive Pick Now

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Given the dominance in every phase of the student loan life cycle and focus on enhancement of Private Education Loan assets and revenues, Sallie Mae (SLM - Free Report) appears to be a solid bet. The company’s focus on the growing consumer banking business and the declining unemployment rate are anticipated to drive the stock.

The Finance sector was one of the best performers in the first-quarter reporting cycle. So, we thought of bringing up a stock from the sector that reflects robust fundamentals and solid long-term growth opportunities.

Sallie Mae has been witnessing upward estimate revisions, reflecting analysts’ optimism about its future prospects. Over the last 90 days, the Zacks Consensus Estimate for 2017 and 2018 increased 5.8% and 2.3%, respectively.

Further, this Zacks Rank #2 (Buy) stock has gained 3.9% over the past six months compared with 5.3% decline recorded by the Zacks categorized Consumer Loans industry.

Notably, Sallie Mae has a number of other aspects that make it an attractive investment option.

5 Reasons Why Sallie Mae is a Golden Egg  

Focused Approach: Sallie Mae intends to improve Private Education Loan assets and revenues while maintaining a strong capital position and introducing multiple complementary products. Moreover, it expects an improvement in the efficiency ratio as a result of expense management initiatives.

Growth Prospects: Sallie Mae’s student loan portfolio is likely to benefit from the improving trends of enrollment and increasing tuition costs leading to higher demand for education loans for the next few years.

Revenue Growth: Organic growth remains a key strength at Sallie Mae, as depicted in its revenue growth story. The company’s projected sales growth (F1/F0) of 24.0% (as against the 6.4% industry average) indicates constant upward momentum in revenues.

Earnings Per Share Strength: Sallie Mae witnessed earnings growth of 41.2% over the last three–five years. In addition, the company’s long-term (three–five years) estimated EPS growth rate of 10.0% promises rewards for investors, over the long run.

Superior Return on Equity (ROE): Sallie Mae’s ROE of 12.7%, compared with the industry average of 12.6%, highlights the company’s commendable position over its peers.

Stocks to Consider

World Acceptance Corporation WRLD has been witnessing upward estimate revisions for the last 60 days. Additionally, the stock jumped over 66% in the past one year. It currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Artisan Partners Asset Management Inc. APAM has been witnessing upward estimate revisions for the last 60 days. Also, the company’s shares have risen nearly 10.4% in the past one year. It presently holds a Zacks Rank #2.

KKR & Co. L.P. KKR has been witnessing upward estimate revisions for the last 60 days. In the past one year, the company’s share price has been up more than 50%. It also carries a Zacks Rank #2.

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