Cherry Hill Mortgage Investment Corporation (NYSE:CHMI), a mortgage reits company based in United States, saw significant share price volatility over the past couple of months on the NYSE, rising to the highs of $18.54 and falling to the lows of $16.12. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Cherry Hill Mortgage Investment’s current trading price of $16.95 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Cherry Hill Mortgage Investment’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. View our latest analysis for Cherry Hill Mortgage Investment
What is Cherry Hill Mortgage Investment worth?Great news for investors – Cherry Hill Mortgage Investment is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is $69.42, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. Cherry Hill Mortgage Investment’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.
What does the future of Cherry Hill Mortgage Investment look like?Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. Though in the case of Cherry Hill Mortgage Investment, it is expected to deliver a highly negative earnings growth in the next few years, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.
What this means for you:
Are you a shareholder? Although CHMI is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. I recommend you think about whether you want to increase your portfolio exposure to CHMI, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping an eye on CHMI for a while, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Cherry Hill Mortgage Investment. You can find everything you need to know about Cherry Hill Mortgage Investment in the latest infographic research report. If you are no longer interested in Cherry Hill Mortgage Investment, you can use our free platform to see my list of over 50 other stocks with a high growth potential.