Why Two Harbors Investment Corp (NYSE:TWO) Could Be A Buy
Two Harbors Investment Corp (NYSE:TWO), a mortgage reits company based in United States, received a lot of attention from a substantial price movement on the NYSE in the over the last few months, increasing to $15.9 at one point, and dropping to the lows of $14.21. 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 Two Harbors Investment’s current trading price of $15.6 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 Two Harbors Investment’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 Two Harbors Investment
What’s the opportunity in Two Harbors Investment?
Great news for investors – Two Harbors Investment is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is $20.17, but it is currently trading at US$15.60 on the share market, meaning that there is still an opportunity to buy now. Two Harbors 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.
Can we expect growth from Two Harbors Investment?
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. Two Harbors Investment’s earnings growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. This should lead to robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? Since TWO is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on TWO for a while, now might be the time to make a leap. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy TWO. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed investment decision.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Two Harbors Investment. You can find everything you need to know about Two Harbors Investment in the latest infographic research report. If you are no longer interested in Two Harbors Investment, 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.
