Please ensure Javascript is enabled for purposes of website accessibility

This Small-Cap Stock Could Have 10X Return Potential

By Matthew Frankel, CFP® and Toby Bordelon – Oct 27, 2021 at 6:31AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Here's a stock that isn't a household name, but could be one of the most exciting growth stories in the market.

Commercial real estate finance company Walker & Dunlop (WD 1.89%) isn't exactly a household name, but maybe it should be. The stock has been a 10-bagger for investors over the past decade, and the company still has a large addressable market opportunity and a small-cap valuation. In this Fool Live video clip, recorded on Oct. 18, Fool.com contributor Toby Bordelon explains why Walker & Dunlop is one of his largest stock positions and why he's so excited about the future.

10 stocks we like better than Walker & Dunlop
When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

They just revealed what they believe are the ten best stocks for investors to buy right now... and Walker & Dunlop wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

 

*Stock Advisor returns as of October 20, 2021

 

Toby Bordelon: Walker & Dunlop, yeah, great little company. I say little because they are. I just looked it up this morning, $4 billion market cap. This is why it's a little bit surprising to me. I remember several months ago, I was doing a Fool Live show. Vicki Hutchison who also follows the company well was talking about it. She mentioned, a big small-cap. I said there's no way because I bought this I think almost 10 years ago and I've gotten something like a 700% return on it so far. Just looking at my return, it can't possibly be a small market cap as she's saying. I looked at it, I'm like, "Oh, my gosh, it still is." It's still a small company.

You think about companies that have done very, very well for you and which might still get a 10x from here in a reasonable amount of time, this one comes to top of my list quite honestly. They have a lot of room to grow. What they do, if you're not familiar with them, commercial real estate financing, fundamentally is what they do. Their focus is financing for multi-family housing. You think about the mortgage you have for your house, this will be similar except with multiple in house unit where we have apartment complex or townhouse or whatever. But that's their focus, that has been their focus historically. Pretty good.

Last year, $30 billion in debt financing they originated. In 2020, they were, I think the No. 4 commercial finance company in the commercial real estate lender, the company, No. 1 in multi-family lending. Top of their game. You talk about top dog in the industry, that's them. Continuing to expand in some other areas. The CEO, Willy Walker, is the grandson one of the founders, the Walker of Walker and Dunlop. Even though it's a public company and it's not founder-led, they've been around too long for that. It's still family led. Willy Walker grew up in the company, basically, learning the ropes from his father and grandfather. It's still the same culture that was there initially. When you talk about leadership, you're talking about the CEO whose got a large stake, he's got a large stake. His name is literally on indoor.

There's a lot of family pride wrapped up into this so I don't think you have to worry too much about leadership. It ticks a lot of boxes for me, great leadership, lots of potential. An industry that people don't focus on too much but they're dominating that industry. I really like this one. Definitely something I think everyone should look at. Again, $4 billion market cap for Walker and Dunlop, ticker symbol WD.

Toby Bordelon owns shares of Walker & Dunlop. The Motley Fool owns shares of and recommends Walker & Dunlop. The Motley Fool recommends Walker & Dunlop, Inc. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.