The stock trades at just 9.5 times forward earnings and 0.19 times trailing sales. Analysts’ TakeĪ quick glance at Rocket’s valuation metrics makes it seem like a screaming buy.
It sold its shares to the public right when its business was likely peaking. Rocket may never again put up growth numbers rivaling 2020’s numbers. The company’s management decided to go public at what will likely end up being the peak of the mortgage cycle. They no longer had to worry about commute times, and they were no longer tethered to specific regions of the country.Īs a result, mortgage companies like Rocket experienced record growth in 2020. Many people’s jobs permanently shifted to remote work. In addition to historically low interest rates, Americans moved out of major cities and into the suburbs in droves.Ĭities known for their high costs of living, like New York and Los Angeles, were slammed by the pandemic. Mortgage rates plummeted, and a housing boom was triggered. When the pandemic hit, the Federal Reserve cut interest rates to 0%. There’s a good reason for what happened to Rocket’s business in 2020. If those growth numbers make you a bit skeptical, you’ve got sound investing sense. Rocket nearly increased its net income ten times in a single year. Rocket also reported $9.39 billion of net income in fiscal 2020, up 948%. In February, Rocket reported fiscal 2020 revenue of $15.73 billion, up 208% from 2019. But I definitely believe it should go on your list of stocks to potentially buy on the next market dip. I believe it’s still too early to be buying Rocket at this point. I’ve been recommending that investors avoid most 2020 IPO stocks like the plague. RKT stock is already up over 30% from its $18 IPO price back in August. Unlike other high-growth stocks, it also trades at a reasonable valuation. Not only is Rocket an extremely profitable company, but it reported record profits last year.
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