This Small-Cap Stock Could Have 10X Return Potential

Commercial real estate finance company Walker & Dunlop (WD -2.51%) 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.

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.