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Trade of the Day: SLM Holding Corp. (SLM)

More commonly known as Sallie Mae, SLM Holding Co. is very undervalued right now

   

SLM Holding Corp. (SLM) is the nation’s largest private provider and servicer of student loans. Before it was privatized 10 years ago, it was a government-sponsored entity known as Sallie Mae.

SLM826 300x183 Trade of the Day: SLM Holding Corp. (SLM)Student loans have come in for a lot of criticism lately, but they are still the fastest-growing segment of the consumer-finance industry. SLM has managed to stay above the fray, and does not participate in a lot of the practices that have brought scrutiny; it does not make loans to students at for-profit schools or vocational schools, for instance, and does not make high-risk loans. SLM is splitting into two parts later this year — one with the legacy-loan business, and one as a consumer-focused bank. This is a very undervalued company and this move should help unlock some hidden value.

I recommend buying SLM at current levels for a $26.50 target.

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