Every once in a while I run a stock screen to see if anything passes some very stringent criteria, only to find nothing passes through. Yesterday something did come up: Gramercy Capital Corp. (NYSE: GKK). Here was my criteria on the screen, along with Gramercy's numbers:
- One year sales growth had to be at least 20% (65%)
- Minimum profit margin of 20% (49%)
- Maximum Price-to-sales ratio under 3 (2)
- Stock price between $10 ad $25 ($17)
- Market capitalization under $1 billion ($900 million)
I could have added more criteria because to my pleasant surprise Gramercy is paying over a 14% yield, has a very low trailing P/E of of 3.34 and forward looking guess of 5.7. Furthermore, it has Return on Equity (ROE) Per Share of 29.84% and a Price-to-book of 1.26. So everything is looking good, but is it a value or value trap?
Gramercy Capital, a real estate investment trust (REIT), invests in commercial real estate and real estate loans secured by commercial properties in 38 states. It owns more than 1,000 properties primarily leased to banks and other financial institutions; Bank of America and Wachovia are its largest tenants and together account for about half of all rental revenues -- recurring revenues!
Today I am bringing this stock to your attention so that others might add something to the breath of information in consideration of a potential buying opportunity while the stock is 50% off its 52 week high. I will be studying this one further and making personal inquiries today to find out more, and report back in another post.
Do you have any light to shine on this company?
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I do not own shares of GKK.
