CIT Group Inc. (CIT) may not be getting full credit for its long-term potential, says Matthew C. Schultheis, Analyst at Boenning & Scattergood, Inc., as the company is set for growth due to its unique lending niches, such as airplane financing, and its ability to generate loans and the deposits to fund them.
“I do still like CIT Group. It’s international, and they have some interesting lending niches that they do very well, such as airplane and rail car financing,” Mr. Schultheis said. “One of the things I like about airplane finance is that if you take a long view of passenger and freight airline travel around the world, it’s very clear that there is a lot more demand out there to be built into the system. Passenger traffic is just going to keep growing for the next 20 years. There may be some blips in there, but CIT Group is involved with that long-term growth trend, and it bodes well for them.”
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Mr. Schultheis also says that CIT Group has done a solid job of improving its financing and generating loans, and at the stock’s current price of around $50, he sees a discount relative to the company’s growth potential.
“Right now we have a $53 target price, and the stock is around $50. I would argue it should easily be trading at $53, just to be in line with the multiples of its peers. There is a discount there. You also have the upside of an asset generator and a good growing company in some spaces that have long demographic benefits to them,” Mr. Schultheis said.
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