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Urban Edge Properties (NYSE:UE), which is in the reits business, and is based in United States, led the NYSE gainers with a relatively large price hike in the past couple of weeks. As a US$2.6b market-cap stock, it seems odd Urban Edge Properties is not more well-covered by analysts. However, this is not necessarily a bad thing given that there are less eyes on the stock to push it closer to fair value. Is there still an opportunity to buy? Let’s examine Urban Edge Properties’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
What’s the opportunity in Urban Edge Properties?
According to my valuation model, Urban Edge Properties seems to be fairly priced at around 13% below my intrinsic value, which means if you buy Urban Edge Properties today, you’d be paying a reasonable price for it. And if you believe the company’s true value is $23.61, then there isn’t much room for the share price grow beyond what it’s currently trading. Is there another opportunity to buy low in the future? Since Urban Edge Properties’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
What kind of growth will Urban Edge Properties generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. However, with a negative profit growth of -3.4% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Urban Edge Properties. This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? Currently, UE 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 optimal 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 UE for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The price seems 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 UE 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 Urban Edge Properties. You can find everything you need to know about Urban Edge Properties in the latest infographic research report. If you are no longer interested in Urban Edge Properties, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.