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Banking On Land Values in Puerto Rico

Puerto Rico's W Holding (WHI), a bank holding company with 51 branches on the island, is a sleeper of sorts. Some pros think the obscure stock is worth a lot more than its price of 16.48. Donald Gimbel of investment firm Carret, who owns shares, figures W, trading at 8.9 times his 2004 earnings estimate of $1.80, deserves a p-e ratio of 20 since its earnings are growing at about 30% a year. He puts its worth at 35. One of W's unrecognized assets: its land, which is on the books at cost. W is developing some into branch locations. "Although it's impossible to determine exactly the value of the land, we estimate it's worth tens of millions of dollars more than what is carried on the books," says Audrey Snell of investment firm Brean Murray, who rates W a strong buy. She says land prices in Puerto Rico are shooting up -- and estimates W's assets will grow to $10 billion in 2003 and to $12 billion in 2004, up from 2002's $8.2 billion, not including the land's current value. Snell sees earnings of $1.31 a share in 2003 and $1.79 in 2004.

Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them. By Gene G. Marcial

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