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Saturday, 09/18/2004

What Glass Ceiling?
By Nich Sheldon
GBCI - Glacier Bancorp, Inc

Company Description

Headquartered in Kalispell, Montana, Glacier Bancorp, Inc. conducts business from Glacier Bank of Kalispell, First Security Bank of Missoula, Glacier Bank of Whitefish, Valley Bank of Helena, Big Sky Western Bank of Bozeman, Western Security Bank of Billings, all located in Montana, and Mountain West Bank located in Idaho with two branches in Utah and two in Washington. (Source: Company Press Release)

[Source: Company Press Release]

Reasons to Invest:

This week's DOTW is Glacier Bancorp, Inc (NASDAQ: GBCI). Despite a relatively low paying dividend, I am forecasting a hypothetical rise in GBCI's stock of ten points over the next several months. A ten-point rise would register a rough return of 20%-25% for the stock, and as you know I am happy with an annual return of 10%.

Let's get started... Over the first half of 2004, interest income for GBCI rose by 11%, and net interest (after a loan loss provision) rose a whopping 20%. This holding company is prospecting more of the same in the coming quarters and this bodes well for my hypothetical prospectus. Furthermore, Greenspan is most likely going to raise interest rates at the quarter point "measured pace," during Tuesday's FOMC meeting. While rate hikes may be seen as detrimental to the markets recovery, people are still going to be buying houses and taking out loans, which serves well for the banking industry, as increased rates generally means more interest.

As far as news surrounding the company goes, I don't see much new developments taking shape in the near future. Perhaps the company is focusing on staying in-line, or beating their earnings estimates for the next quarter. I'll leave the speculation up to you.

The fact that GBCI has outperformed nearly two thirds of its industry over the past 13-weeks is something else to consider when initiating the DRIP. On top of that, I cannot overlook Glacier's earnings per share (EPS) growth rate forecast of 14.73 percent over the next year.

The 3-year forecast for GBCI shows a sales percentage growth rate of 18.39, EPS growth rate of 20.63 percent and dividend percentage growth rate of 11.82 percent. What does this mean? The general rule of thumb is that DRIP investors want to see EPS growth at the highest percentage. If EPS is growing more rapidly than Dividends (and it is), then the chances of the Dividend growing is much higher. If EPS is growing faster than sales, it means that costs are being controlled. The fact that GBCI has a sales rate of 18.39 percent over the next three years means that GBCI is doing what they can to maintain a healthy rate of sales growth, which bodes well for the long-term investor, such as our selves.

Over the past 52-weeks GBCI has seen its stock grow by a margin of 29.86 percent, as the company gained approximately ten points in the past 12-months. If you asked me, I would be thrilled with a year-over-year return of 30 percent, especially for a stock that trades on volume of under 100K on a daily basis.

Ready for a little Technical Analysis? A quick look at the daily chart and I recognize a late 2002 ascending regression channel which has served as support/resistance for the stock for nearly two-years now. Up until April and May of this year the bottom bar of this channel was never even tested. However, when the bottom bar was tested, the stock consolidated marginally higher for the next month or so before setting a new 52-week at the end of May. In August of this year, shares bottomed out of their channel again, and retested its 200-DMA. Once shares touched this moving average they reversed their bearish trend, and have spent the past six weeks on a bullish rampage. The recent bullish sentiment has sent GBCI to a new all time high (30.35), and this could mean that the overextended stock is ready for a little profit taking in the next few weeks. The MACD on the daily chart has been on a buy signal for nearly two months, but it appears that the Stochastics indicator is on the verge of a bearish crossover.

In terms of the weekly chart, this past week of trading registered the first week of losses for the stock in the past six weeks. This is to be expected, especially since the stock just set a new 52-week high last week, and since the stock has been trending higher for five week's now. The weekly MACD and Stochastics indicators are both currently giving off buy signals.

Since January of 2001, 32 of the past 43 months have been in the green. On that note, I am going to put a low risk rating on this DRIP plan, as I see practically no real catalyst for future loses on the long-term horizon, especially since there is no overhead resistance to lower GBCI's proverbial glass ceiling. As you know, it's anyone's guess.

Glacier Bancorp offers an annual dividend of $0.68/share owned, which tallies out to a 2.26 percent dividend yield.

This ends another exciting episode of the Drip of the Week. Stay tuned next week, as we will spotlight another stock worthy of the limelight.

Plan your trade, and trade your plan.

Until Next Week,
Nich Sheldon
Editor In Chief

Broker Recommendations

Strong Buy         0
Buy                1
Hold               3
Sell               0
Strong Sell        0

Brokers Covering   4

DRIP Information:
Shares to Qualify = 1
Auto-reinvestment = No
Accept Foreign Accounts: Yes
Temper Enrollment: Yes

Min/Max Investment = $100-$2,000/quarter

Reinvestment Fees - 
Dividend investment fees: $0.00
Cash investment fees: $0.00
Auto reinvestment fees: N/A

Transfer Agent:
Davidson Trust Co. 

Corporate Headquarters:
49 Commons Loop
Kalispell, MT 59901
Phone: (406) 756-4200
Fax: (406) 756-3518


Copyright 2003

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