First Real Estate Investment Trust (SGX:AW9U), a reits company based in Singapore, had a relatively subdued couple of weeks in terms of changes in share price, which continued to float around the range of SGD1.33 to SGD1.42. However, is this the true valuation level of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at First Real Estate Investment Trust’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. See our latest analysis for First Real Estate Investment Trust
What is First Real Estate Investment Trust worth?The stock seems fairly valued at the moment according to my valuation model. It’s trading around 5.32% below my intrinsic value, which means if you buy First Real Estate Investment Trust today, you’d be paying a fair price for it. And if you believe that the stock is really worth SGD1.46, then there isn’t much room for the share price grow beyond what it’s currently trading. In addition to this, it seems like First Real Estate Investment Trust’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s fairly valued. This is because the stock is less volatile than the wider market given its low beta.
What does the future of First Real Estate Investment Trust look like?Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a negative profit growth of -1.48% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for First Real Estate Investment Trust. This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? Currently, AW9U appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on AW9U for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on AW9U should the price fluctuate below its true value.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on First Real Estate Investment Trust. You can find everything you need to know about First Real Estate Investment Trust in the latest infographic research report. If you are no longer interested in First Real Estate Investment Trust, you can use our free platform to see my list of over 50 other stocks with a high growth potential.