Friday, June 29, 2007

Redwood Trust Inc.

Redwood Trust Inc. is a high-yielding company with a forward-looking price to earnings ratio of just 8.43 times next year’s projected earnings. With a recent ticker price of $49.02, Redwood Trust Inc. is ready for significant appreciation. The company’s operating profit margin is an impressive 68.29%. This results in an annual operating cash flow of $38.8M.

Redwood Trust Inc. is a cash cow that has a reasonably attractive valuation. With a beta of 1.07, the company is more risky than the stock market as a whole. This information is useful, but a more careful analysis of Redwood Trust Inc. reveals that the company’s risk profile is not as volatile as many of its competitors. It’s important to invest in a sufficiently liquid stock that money can be taken out of the position on every trading day and Redwood Trust Inc.’s total market capitalization of $1.341B is ample proof of such liquidity.

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