NMI Holdings: Excellent Relative Value, Buy

Gary J. Gordon
3.07K Followers

Summary

  • I recommend National Mortgage Insurance over fintech Upstart due to stark valuation disparities reminiscent of past market bubbles.
  • National Mortgage boasts a 13% earnings yield and a P/E ratio of 7.8, significantly undervalued compared to the S&P 500 and Upstart.
  • The company’s strong credit protections and low risk of mortgage defaults make it a safer investment.
  • With growth drivers like insurance in force and share buybacks, I expect NMIH's EPS to rise, making it a compelling value stock.

Drone view of a residential building site under construction

Justin Paget

Why I wrote this article.

I haven’t written for SA for several months. My articles over time were generally of two types. One was recommending purchase of value stocks in the housing and consumer finance industries, my area of experience. The

This article was written by

3.07K Followers
Gary Gordon’s career was on Wall Street, where he was a stock analyst covering the housing, mortgage and consumer finance industries. He also served as a U.S. investment strategist and as a portfolio manager. The bulk of his work career was at PaineWebber and UBS. He is now retired. Mr. Gordon is an adjunct professor at Mercy College in New York. He teaches economics on campus and math at prisons (Sing Sing and Taconic in New York). He also presents financial literacy seminars to adults and students. He is on the Board of Hudson Link (college education for incarcerated men and women) and the Baron de Hirsch Fund. Mr. Gordon is married with two young adult children. He has degrees from Colgate University (BA '74, philosophy) and The Wharton School (MBA '77, finance).

Analyst’s Disclosure:I/we have a beneficial long position in the shares of NMIH either through stock ownership, options, or other derivatives. 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.

I own the stocks of NMIH peers MTG and RDN

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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