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ASPS is One of the Hottest Stocks Around

Altisource Portfolio Solutions (ASPS) is one of the hottest stocks around. The problem is I don’t know much about the industry. I’ve watched this stock since November — and gave serious thought to buying it around $40 — but have held off it because I don’t know much about mortgage service providers.

Altisource used to be part of Ocwen Financial (OCN) and was spun off into a public company in 2009. The company is headquartered in Luxembourg.

One Year Chart

Here’s the one-year chart of ASPS. The numbers look great, but this isn’t an ordinary industry. Altisource makes money off servicing mortgage defaults. Will that accelerate or continue? Is the economy better and people can stop defaulting? What if the real estate market heats up, will ASPS make more money off origination services? There’s so many questions surrounding this company, and I hate to invest in industries I don’t know about.

Another concern is if we can count on this company to hit estimates. Altisource has missed street estimates four times since coming public. The worst miss was 2010 Q3 when the company missed by 20 cents. Ouch. Lately the company has been beat.

Fair Value

Let’s just say ASPS is worth 20 times earnings. That makes the stock undervalued, but to be honest with you I started watching ASPS when the P/E was 12. It was cheaper then, and I should have bought. I almost did.

Sharek’s Take

I’m still on the fence about this stock.  I hate getting into things I’m not confident about, and know little about the mortgage service industry. See if you can figure it out on Altisource’s website. I should buy Altisource if it dips again.

View the Ten-Year Chart here.
View the Earnings Table here.

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