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A real estate investment trust (REIT) is an entity that essentially pools the money of shareholders to invest in real estate. REITs are not required to pay taxes, but they must distribute income amongst investors. Whether or not you're a real estate investor, it may be a good idea to look at REITs for your portfolio.

The real estate market is still weak, so ideally investors should be looking to buy some properties and holding them until we see a rebound to take some hefty returns. Clearly, it's not feasible for most investors to look for and maintain commercial real estate, especially if they are part-time investors. REITs make it easy to play the realty market without actually owning the properties.

Investors that like big dividend payers, as well as those who like the real estate market in general, will appreciate CYS Investments Inc (NYSE:CYS), based in Massachusetts. Of the 10 analysts covering the company, 7 rate it a strong buy, 1 rates it a hold and 1 rates it a sell. Typically, I don't put too much weight behind analyst recommendations unless it lines up with my valuations. In the case of CYS, it does.

I used a Graham valuation to value the company at a growth rate of 0% over 7-10 years and with a growth rate of 60% over 7-10 years. Analysts expect a 60% growth rate but I always use a 0% growth calculation as a conservative estimate. CYS is valued at $49.66 with a 0% growth and $56.00 at 60% growth by the graham valuation method.

Because I received an extremely large upside, I decided to use the PE Multiple valuation also. I used a conservative growth rate of 10% with a business risk, financial risk, and earnings risk all 10% higher than the industry. Even with these conservative figures, I got a valuation of $19.96.

Between the multiple valuations, the possible upside ranges from 37% to about 287% over 10 years. That's an annualized return of between 3.198% and 14.46% without the hefty dividend paid by CYS (13%). If that's not convincing enough, the comparisons with the industry overall point at a stock that is relatively cheap.

The industry trades between 10 and 32 times earnings, while CYS trades between 4 and 16 times earnings. CYS is trading at half the price of the industry based on earnings alone. CYS is also trading at a Price-to-book value of 1.04, which is considerably lower than the industry average of 2.19. For investors, this means they're paying $1.04 for every $1.00 of assets that CYS holds versus $2.19 for every $1.00 of assets for the industry average.

The reason CYS is trading so cheap may be because it's still a relatively young company that is growing fast. Over the past five years, revenues have grown 37% at CYS, while they've only grown 11.33% for the industry overall. Earnings per share have also increased significantly, meaning management is becoming more efficient. Over the past five years, EPS have grown 61% at CYS compared to only 13% for the industry. Revenue per employee is $18 million for CYS, while it's only $165,000 for the industry (employee is defined differently by each company, so it's always a perfect metric to compare companies).

The chart has a largely upward trend over the past three years and shows no signs of slowing down. Investors looking to time a good entry may wait until RSI and Ultimate oscillator come out of overbought territory. Neither of the indicators has entered oversold territory in the past year and I don't foresee it doing so anytime soon. The MACD shows upwards divergence and hasn't seen a midpoint crossover since quarter 4 of 2011. The price is trading above the 26 day average which is above the 52 day average, which is above the 104 day average.

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Based on the technicals and the fundamentals, I feel this is a great value and is extremely cheap. I would recommend this for a relatively long investment for price appreciation and dividend payments. Like anything else, you should research a particular stock before investing. For risk management, this stock is optionable, so that you can customize a strategy to your personal preference. I've outlined some options strategies in 'CYS Investments: 2 Options Strategies For This Dividend Bull' as a starting point.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in CYS over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.