The mortgage sector was hard hit by the financial contagion in 2008. Mortgage rates plunged like anything and players like Federal Agricultural Mortgage Corporation (AGM), a buyer and guarantor of farm loans, were adversely affected to a large extent. However, the company has recovered from its losses and the stock has rallied up to $34.98 from $3 in 2008. And yet, investors are still reluctant to realize the potential of this company which is why it continues to trade a discount to the sector mean P/E level. I believe that investors will soon realize the upside potential of this company and it will revert to its industry mean level P/E, offering a return of 59%.
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