I’ve been watching the price movement of Countrywide Financial (CFC) and E*Trade (ETFC) closely lately and they are certainly taking a beating from the nationwide mortgage industry meltdown.
Investing in these two companies is not for the light at heart. Countrywide is trading around $5 per share and E*Trade under $2.50. But, the larger question here is whether they will fall much further in price and what the probability of insolvency is. There have been several bailouts of large financial corporations lately and this leads me to believe that should Countrywide or E*Trade need extra assistance to prevent bankruptcy, they will most likely get it.
At these prices a 50% pop in price is quite possible and if the companies weather the credit turmoil, these prices could make an incredible entry point for a long term financial holding.
Once Countrywide falls below $5 per share, there are no margin holdings allowed on the stock which should further depress the price. In addition, when a stock falls below $3 per share, institutions are not likely to stay invested in the security. E*Trade has already suffered this fate and has seen a large double digit percentage increases in price after hitting $2 per share.
[tags]countrywide, etrade, investing, stock market, shaun carter, financial, dow jones, mortgage, credit[/tags]
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