On the surface, Fly Leasing (NYSE:FLY) looks like an undervalued, high yielding investment. This $394 million Ireland-based small-cap lessor of commercial jet aircraft has a dividend yield of 6.3%. Who wouldn't want to own a stock with that yield? The valuation also looks compelling with a trailing PE of only 6.3, a forward PE of 6.9, and a price to book ratio of just 0.74. These valuation metrics are all significantly below the S&P 500's valuation ratios: trailing PE of 17, forward PE of 15, and price to book ratio of 2.4. If investors just look at the valuation and the yield, they could be caught in a value trap. There are a few things going on that...
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