04/06/2017 2:50 am EST

Focus: REITS

John Reese

Founder and CEO, And Validea Capital Management

Chimera Investment Corporation (CIM) is a REIT yielding 9.9%; it is primarily engaged in the mortgage backed and real estate-related securities. 

The stock passes the investment models I have designed based the strategies based on David Dreman and Peter Lynch.

The investor should examine the P/E (6.40) relative to the growth rate (22.88%), based on the average of the 3, 4 and 5 year historical eps growth rates, for a company. This is a quick way of determining the fairness of the price. In this particular case, the P/E/G ratio for CIM (0.28) is very favorable.

This methodology favors companies that have several years of fast earnings growth; the EPS growth rate for CIM is 22.9%, based on the average of the 3, 4 and 5 year historical eps growth rates, which is considered very good.

Return on Assets is way to measure a financial intermediary's profitability. CIM's return on assets of  3.45% is above the minimum 1% required, thus passing the criterion. This methodology uses the Equity/Assets Ratio as a way to determine a financial intermediary's health; at 19%, the equity/asset ratio is extremely health.

Subscribe to John Reese's Validea Hot List Newsletter here…

Related Articles on REITS

Keyword Image
Take a Ride at Cedar Fair
06/05/2018 5:00 am EST

While the share price of Cedar Fair, L.P. (FUN) managed to recover nearly completely after a wild ro...