Stock Picks for May 2025

Today is May 7th, 2025 and it’s time for some new stock picks!

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Market Overview

US President Trump’s tariffs have caused a stir in capital markets with stocks, bonds, currencies and other asset prices being volatile over the last few weeks. That created some investment opportunities last month to buy even better companies at good prices. However, the stock market has already recovered a lot of the losses so perhaps it’s fairly priced now. Despite that, we are still finding a number of good companies at good prices to invest in.

Bank7

The first such example of good a company trading at a good price is Bank7, symbol BSVN on the NASDAQ. Bank7 is a small so-called regional bank in the US.  This full-service Oklahoma-based community bank was chartered in 1901 and relocated to Oklahoma City in 2005.  It has locations in Oklahoma, Kansas, and Texas.

Bank7 has been able to generate return on equity of almost 20% over the last 8 years, yet it only trades at 1.6 times book value. With that kind of profitability, if sustained, it should trade closer to 3 times book value. While we don’t expect it’s valuation to rise quickly due to its small size, it has a market capitalization of just over 350 million, this stock can generate decent low double digit total returns for shareholders even at lower valuations.

McGrath Rent

My second stock pick is business-to-business rental company, McGrath Rent, symbol MGRC on the NASDAQ. It is comprised of four main business
segments: Modular building segment; Portable storage container segment; Electronic test equipment segment and its classroom manufacturing business selling modular buildings used primarily as classrooms.

Reasonably profitable company that’s generated a median return on equity of 15% over the last 10 years and it trades at 2.3 times book value, which is fair for this sort of stock. Reasonably priced, not at a discount but still decent.

Installed Building Products Inc.

My third pick Installed Building Products, symbol IBP on the NASDAQ. Installed Building Products is an insulation installer serving the residential new
construction market and are also a diversified installer of complementary building products, including waterproofing, fire-stopping and fireproofing, garage doors, rain gutters, window blinds, shower doors, closet shelving, mirrors and other products throughout the United States.  This company has been extremely profitable, generating an average of 32% return on equity over the last 10 years with the last 5 years averaging 37%!

This is a company that’s performing spectacularly well yet the stock price is down about 30% year over year, likely due to the general market volatility due to Mr Trump’s tariffs or the perceived economic slowdown or recession even that could be caused by tariffs. I believe the stock price at about 6 times book value is reasonable for this exceptional company. I like it. I’m buying it. Time will tell whether the current price was low enough but I believe this stock can easily give us double digit total returns over the next 5+ years.

Give Us a Call

As always, if you have questions about whether these stocks fit in your portfolio or if you have any other investment related questions, give us a call! 604-288-2084

Thank you!

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