3 Undervalued Mortgage Real Estate Investment Trusts (REITs) Stocks for Tuesday, May 13
Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 3 stocks made the list for top value stocks in the Mortgage Real Estate Investment Trusts (REITs) industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.
Why Focus on Undervalued Mortgage Real Estate Investment Trusts (REITs) Stocks?
Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.
AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.
What Goes Into AAII’s Value Grade?
Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.
AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.
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3 Undervalued Mortgage Real Estate Investment Trusts (REITs) Stocks
Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 3 undervalued stocks in the Mortgage Real Estate Investment Trusts (REITs) industry for Tuesday, May 13, 2025. Let’s take a closer look at their individual scores to see how they measure up against each other and the Mortgage Real Estate Investment Trusts (REITs) industry median.
| Company | Ticker | Price/Sales | Price/Earnings | EV/EBITDA | Shareholder Yield | Price/Book Value | Price/Free Cash Flow | Value Grade |
| Chimera Investment Corporation | CIM | 3.21 | 8.5 | na | 11.4% | 0.42 | na |
A |
| PennyMac Mortgage Investment Trust | PMT | 1.89 | 15.0 | na | 12.1% | 0.58 | na |
A |
| Two Harbors Investment Corp. | TWO | 3.35 | na | na | 14.4% | 0.59 | 14.3 |
B |
The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.
The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)
Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).
As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.
Chimera Investment Corporation’s Value Grade
Value Grade:
| Metric | Score | CIM | Industry Median |
| Price/Sales | 68 | 3.21 |
4.26 |
| Price/Earnings | 13 | 8.5 |
10.7 |
| EV/EBITDA | na | na | 15.6 |
| Shareholder Yield | 5 | 11.4% |
11.1% |
| Price/Book Value | 11 | 0.42 |
0.63 |
| Price/Free Cash Flow | na | na |
20.2 |
Chimera Investment Corporation operates as a real estate investment trust (REIT) in the United States. The company, through its subsidiaries, invests in a portfolio of mortgage assets, including residential mortgage loans, agency residential mortgage-backed securities, non-agency residential mortgage-backed securities, agency mortgage-backed securities secured by pools of commercial mortgage loans, business purpose and investor loans, residential transition loans, and other real estate related securities. It invests in investment grade, non-investment grade, and non-rated securities. The company qualifies as a REIT for federal income tax purposes. As a REIT, it intends to distribute at least 90% of its taxable income as dividends to shareholders. Chimera Investment Corporation was incorporated in 2007 and is headquartered in New York, New York.
Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.
Chimera Investment Corporation has a Value Score of 91, which is considered to be undervalued.
When you look at Chimera Investment Corporation’s price-to-sales ratio at 3.21 compared to the industry median at 4.26, this company has a lower price relative to revenue compared to its peers. This could make Chimera Investment Corporation’s stock more attractive for value investors.
Chimera Investment Corporation’s price-earnings ratio is 8.50 compared to the industry median at 10.70. This means it has a lower share price relative to earnings compared to its peers. This could make Chimera Investment Corporation more attractive for value investors.
Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Chimera Investment Corporation’s shareholder yield is higher than its industry median ratio of 11.10%. Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.
As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Chimera Investment Corporation’s price-to-book ratio is lower than its industry median ratio of 0.63. This could make Chimera Investment Corporation more attractive to investors looking for a new addition to their portfolio.
PennyMac Mortgage Investment Trust’s Value Grade
Value Grade:
| Metric | Score | PMT | Industry Median |
| Price/Sales | 50 | 1.89 |
4.26 |
| Price/Earnings | 40 | 15.0 |
10.7 |
| EV/EBITDA | na | na | 15.6 |
| Shareholder Yield | 4 | 12.1% | 11.1% |
| Price/Book Value | 16 | 0.58 | 0.63 |
| Price/Free Cash Flow | na | na | 20.2 |
PennyMac Mortgage Investment Trust, through its subsidiary, primarily invests in residential mortgage-related assets in the United States. The company operates through: Credit Sensitive Strategies, Interest Rate Sensitive Strategies, Correspondent Production segments. The Credit Sensitive Strategies segment invests in credit risk transfer (CRT) agreements and subordinate mortgage-backed securities (MBS). The Interest Rate Sensitive Strategies segment engages in investing in mortgage servicing rights, base servicing and excess servicing spreads, and agency and senior non-agency MBS, as well as related interest rate hedging activities. The Correspondent Production segment is involved in purchasing, pooling, and reselling newly originated prime credit quality loans directly or in the form of MBS. The company primarily sells its loans to government-sponsored entities. The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its shareholders. The company was incorporated in 2009 and is headquartered in Westlake Village, California.
Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.
PennyMac Mortgage Investment Trust has a Value Score of 87, which is considered to be undervalued.
PennyMac Mortgage Investment Trust’s price-earnings ratio is 15.0 compared to the industry median at 10.7. This means that it has a higher price relative to its earnings compared to its peers. This makes PennyMac Mortgage Investment Trust less attractive for value investors.
PennyMac Mortgage Investment Trust’s price-to-book ratio is lower than its peers. This could make PennyMac Mortgage Investment Trust fairly attractive for value investors when compared to the industry median at 0.63.
You can read more about PennyMac Mortgage Investment Trust’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.
Two Harbors Investment Corp.’s Value Grade
Value Grade:
| Metric | Score | TWO | Industry Median |
| Price/Sales | 70 | 3.35 |
4.26 |
| Price/Earnings | na | na |
10.7 |
| EV/EBITDA | na | na | 15.6 |
| Shareholder Yield | 3 | 14.4% | 11.1% |
| Price/Book Value | 17 | 0.59 | 0.63 |
| Price/Free Cash Flow | 37 | 14.3 | 20.2 |
Two Harbors Investment Corp. invests in, finances, and manages mortgage servicing rights (MSRs), agency residential mortgage-backed securities (RMBS), and other financial assets through RoundPoint in the United States. The company target assets include agency RMBS collateralized by fixed rate mortgage loans, adjustable rate mortgage loans, hybrid mortgage loans, or derivatives; and other assets, such as financial and mortgage-related assets, comprising non-agency securities and non-hedging transactions. It qualifies as a REIT for federal income tax purposes. As a REIT, the company must distribute at least 90% of annual taxable income to its stockholders. Two Harbors Investment Corp. was incorporated in 2009 and is headquartered in Saint Louis Park, Minnesota.
Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.
Two Harbors Investment Corp. has a Value Score of 80, which is considered to be undervalued.
Two Harbors Investment Corp.’s price-to-book ratio is lower than its peers. This could make Two Harbors Investment Corp. fairly attractive for value investors when compared to the industry median at 0.63.
You can read more about Two Harbors Investment Corp.’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.
Other Mortgage Real Estate Investment Trusts (REITs) Stock Grades
Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.
Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Mortgage Real Estate Investment Trusts (REITs) stocks as well as other industrys.
Choosing Which of the 3 Best Mortgage Real Estate Investment Trusts (REITs) Stocks Is Right for You
Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.
- Chimera Investment Corporation stock has a Value Grade of A.
- PennyMac Mortgage Investment Trust stock has a Value Grade of A.
- Two Harbors Investment Corp. stock has a Value Grade of B.
Now that you have a bit more background about each of the 3 undervalued stocks in the Mortgage Real Estate Investment Trusts (REITs) industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.
We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.
A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.
Additional Resources About Mortgage Real Estate Investment Trusts (REITs) Stocks
Want to learn more about Mortgage Real Estate Investment Trusts (REITs) stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.
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