Sun Communities Inc (NYSE:SUI), a reits company based in United States, received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to $92.36 at one point, and dropping to the lows of $83.96. 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 Sun Communities’s current trading price of $91.31 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Sun Communities’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. Check out our latest analysis for Sun Communities
Is Sun Communities still cheap?
According to my valuation model, Sun Communities seems to be fairly priced at around 16.98% below my intrinsic value, which means if you buy Sun Communities today, you’d be paying a fair price for it. And if you believe the company’s true value is $109.98, then there isn’t much room for the share price grow beyond what it’s currently trading. Furthermore, Sun Communities’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 the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.
What kind of growth will Sun Communities generate?
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. With profit expected to grow by 97.11% over the next couple of years, the future seems bright for Sun Communities. It looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? It seems like the market has already priced in SUI’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping tabs on SUI, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Sun Communities. You can find everything you need to know about Sun Communities in the latest infographic research report. If you are no longer interested in Sun Communities, 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.