First Real Estate Investment Trust (SGX:AW9U), a equity real estate investment trusts (reits) company based in Singapore, had a relatively subdued couple of weeks in terms of changes in share price, which continued to float around the range of SGD1.34 to SGD1.41. However, is this the true valuation level of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at First Real Estate Investment Trust’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 First Real Estate Investment Trust
Is First Real Estate Investment Trust still cheap?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 6% below my intrinsic value, which means if you buy First Real Estate Investment Trust today, you’d be paying a reasonable price for it. And if you believe the company’s true value is SGD1.49, then there isn’t much room for the share price grow beyond what it’s currently trading. Furthermore, it seems like First Real Estate Investment Trust’s share price is quite stable, which means there may be less chances to buy low in the future now that it’s fairly valued. This is because the stock is less volatile than the wider market given its low beta.
What does the future of First Real Estate Investment Trust look like?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. 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 34.76% over the next couple of years, the future seems bright for First Real Estate Investment Trust. 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? First Real Estate Investment Trust’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. 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 an eye on First Real Estate Investment Trust, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect 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.