Is There Now An Opportunity In First Potomac Realty Trust (FPO)?
First Potomac Realty Trust (NYSE:FPO), a real estate company based in United States, saw its share price hover around a small range of $11.06 to $11.35 over the last few weeks. But is this actually reflective of the share value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at FPO’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 FPO
Is FPO still cheap?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 13% below my intrinsic value, which means if you buy FPO today, you’d be paying a fair price for it. And if you believe that FPO is really worth $12.78, then there’s not much of an upside to gain from mispricing. Furthermore, FPO’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for FPO to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.
Can we expect growth from FPO?
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 FPO, 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? Currently, FPO 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 de-risk 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 FPO, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on FPO 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 FPO 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 Potomac Realty Trust. You can find everything you need to know about FPO in the latest infographic research report. If you are no longer interested in First Potomac Realty Trust, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see pass 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.
