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A Side-by-side Analysis of Platinum Group Metals Ltd. (PLG) and Investors Real Estate Trust (IRET)

Investors Real Estate Trust (NYSE:IRET), on the other hand, is down -0.53% year to date as of 09/11/2018. It currently trades at $5.65 and has returned 4.63% during the past week.

Platinum Group Metals Ltd. (NYSE:PLG) and Investors Real Estate Trust (NYSE:IRET) are the two most active stocks in the Industrial Metals & Minerals industry based on today’s trading volumes. Investors are clearly interested in the two names, but is one a better choice than the other? We will compare the two companies across growth, profitability, risk, valuation, and insider trends to answer this question.

Growth

The ability to consistently grow earnings at a high compound rate is a defining characteristic of the best companies for long-term investment. Comparatively, IRET is expected to grow at a 6.00% annual rate. All else equal, IRET’s higher growth rate would imply a greater potential for capital appreciation.

Profitability and Returns

Growth in and of itself is not necessarily valuable, and it can even be harmful to shareholders if companies overinvest in unprofitable projects in pursuit of that growth. We will use EBITDA margin and Return on Investment (ROI), which adjust for differences in capital structure, as measure of profitability and return. EBITDA margin of 52.8% for Investors Real Estate Trust (IRET).

Cash Flow



Cash is king when it comes to investing. PLG’s free cash flow (“FCF”) per share for the trailing twelve months was -0.04. Comparatively, IRET’s free cash flow per share was -0.06.

Valuation

PLG trades at compared to a P/B of 1.31, and a P/S of 4.50 for IRET. Given that earnings are what matter most to investors, analysts tend to place a greater weight on the P/E.

Analyst Price Targets and Opinions

A cheap stock isn’t a good investment if the stock is priced accurately. To get a sense of “value” we must compare the current price to some measure of intrinsic value such as a price target. PLG is currently priced at a -98.28% to its one-year price target of 6.96. Comparatively, IRET is -10.74% relative to its price target of 6.33. This suggests that PLG is the better investment over the next year.

Risk and Volatility

To gauge the market risk of a particular stock, investors use beta. Stocks with a beta above 1 are more volatile than the market as a whole. Conversely, a beta below 1 implies below average systematic risk. PLG has a beta of 2.92 and IRET’s beta is 0.78. IRET’s shares are therefore the less volatile of the two stocks.

Insider Activity and Investor Sentiment

Comparing the number of shares sold short to the float is a method analysts often use to get a reading on investor sentiment. PLG has a short ratio of 3.01 compared to a short interest of 4.87 for IRET. This implies that the market is currently less bearish on the outlook for PLG.

Summary




Platinum Group Metals Ltd. (NYSE:PLG) beats Investors Real Estate Trust (NYSE:IRET) on a total of 9 of the 13 factors compared between the two stocks. PLG generates a higher return on investment, has higher cash flow per share, higher liquidity and has lower financial risk. In terms of valuation, PLG is the cheaper of the two stocks on book value and sales basis, PLG is more undervalued relative to its price target. Finally, PLG has better sentiment signals based on short interest.

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