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It's Not Too Late to Buy This Growth Stock

By Demitri Kalogeropoulos and Toby Bordelon – Nov 15, 2021 at 1:47PM

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This company is helping solve major housing problems in the U.S.

Walker & Dunlop (WD -2.85%) is having a good year, but investors might be seeing just the start of its growth run.

In this video clip from "Beat & Raise," recorded on Nov. 5, contributors Brian Withers and Toby Bordelon discuss the highlights from the company's latest earnings report, along with some reasons why it's not too late to buy the stock. 

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Toby Bordelon: Let's do this. This company, Brian, I love, I love Walker & Dunlop because they're consistent performer. They give you what you want, they're doing well, they're running business well, almost like [inaudible 03:01:11] .

They just give you what you want year-in, year-out. Look at this, up 40%, $346.3 million for the revenue, earnings-per-share were up 20%, both of those were a beat.

Walker & Dunlop, if you're not familiar with them, and you might not be, they're a small company. They are in commercial real estate financing specifically, their focus is multi-family housing. They are in fact the largest multi-family housing lender in the country.

We've got to housing problem, that's pretty clear. We have a housing problem in this country. If you want to build more housing, you have to finance it and a lot of people are saying the solution to, at least in some areas, we have a lot of density is more multi-family housing. Walker & Dunlop is part of that solution and business has been good for them.

Look at their stock chart. That's pretty impressive for the year. It's not just the revenue was up 40% year-over-year sequentially, looking back to last quarter up 23%. We're seeing consistent growth both to the one year-ago comps answer last quarter.

Net income was up pretty strongly too. Record transaction volume, that was one thing that has jumped out at me, their record transaction volume this year, they've announced two acquisitions or I'd say they closed on one, they closed on Zelman & Associates, which was a housing research and investment banking firm. They announced the acquisition of Alliant Capital.

This will make Walker & Dunlop the six largest syndicator of low-income housing tax credits in the country. You see they're starting to play a bigger role in affordable housing. They're starting to be part of that solution there. Their strategic plan I put on there, they're making solid progress on the drive to 25, that's their strategic plan and I really like this. The goal here is to double revenue in five years in, from 2020-2025, it'd be they want to get to two billion in revenue.

They're making good progress there. They want to get their debt financing volume for 65 billion, and the real takeaway here from this is this is the consistent vision for his company. If you look at the earnings report, their presentation, if you read through the conference call, you will see them referred to the drive to 25 multiple times.

It's their guiding light and Willy Walker the CEO, Willy has everybody focused on this, they know where they're going and usually when they announced the acquisition of Alliant Capital they said, here's how this helps us on our drive to 25.

It's like every decision they make, every major decision they test it against, does this help us get to our goal? Does this help us achieve the strategic plan? I love that. Clear focus and you're seeing it show up in the results.

Withers: This has been an under-the-radar stock I think for a lot of Fool members. I looked at the five-year history on this stock, five bagger. Is it too late to get into Walker & Dunlop?

Bordelon: It is not. Not by a long stretch. I've owned the stock maybe even 10 years myself. It was an early wreck in a rising portfolio way back and it was micro-cap. I don't know where the exact micro-cap is now.

Withers: Four billion.

Bordelon: Four billion, yeah, so it's still at that four billion mark. It can go higher. Like I legitimately see this as a potential 10-bagger in the next 10-15 years, if not before that, if they continue to execute on this plan, certainly, actually, this is still I think a small cap. You can still get into this and still get some nice returns.

Brian Withers: That's exciting.

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.

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