Having originated $1 trillion in home loans, Rocket Companies (NYSE:RKT) has a massive presence in the real estate market. That being the case, I’m always surprised that RKT stock isn’t more popular on Wall Street than it actually is.
I mean, this should be a darling of the market by now. Amazingly, 96% of all e-closings in the U.S. happen with Rocket Mortgage.
This isn’t to say that RKT stock has been ignored by all traders. Indeed, it appears that the Reddit short-squeeze crowd took a strong interest in Rocket Mortgage earlier this year.
Yet, there’s more to this story than the stock’s short-squeeze potential. The real attention-grabbers should be the company’s ultra-low valuation, its astounding loan origination volume – and, interestingly enough, Rocket Mortgage’s venture into a high-potential ESG niche market.
A Closer Look at Stock
RKT stock started off 2021 drifting near the $20 area, with little fanfare or press coverage.
Who could have imagined what would happen next? Unless you had the inside scoop on Reddit’s next moves, Rocket Companies’ rocket ride would have been nearly impossible to predict.
In early March, without warning, RKT stock catapulted to a 52-week high of $43. Then, almost as quickly, the share price fell right back to $20.
Actually, it went below $20 and has stayed there for months. By early October, shares of Rocket Companies could be purchased for $15 and change.
But hey – let’s not dwell on the negative. With the downward price pressure, there’s a silver lining to be found.
On a trailing 12-month basis, Rocket Companies has a price-to-earnings ratio of just 5.49.
Thus, in a time when bargains are rare on Wall Street, RKT stock looks like an irresistible deal.
Closing the Deal
Do you remember the classic line from the film Glengarry Glen Ross?
I’m referring to the line that says, “Coffee is for closers.”
If that’s true, then Rocket Companies has earned its coffee in 2021.
During the second quarter, the company achieved closed loan origination volume of $83.764 billion, nearly doubling year-over-year and marking a quarterly record for Rocket Companies.
Amazingly, that closed loan volume was more than double the number from 2019’s second quarter, and exceeded that of the entire year of 2018.
Furthermore, Rocket Companies achieved total net revenues of $2.669 billion during this year’s second quarter – not too shabby.
Clearly, this company’s team knows how to close deals. Rocket Companies Vice Chairman and CEO Jay Farner emphasized how much bigger and more lucrative his company’s business could be over the next few months and years:
“Our record purchase mortgage volume puts us well on the path to our goal of becoming the largest retail home purchase lender in the nation by the end of 2023. That strong momentum will carry us into the second half of the year, as we expect our 2021 mortgage origination closed loan volume to exceed 2020’s record performance of $320 billion.”
A Solar Solution
With such an ambitious vision for growth and profitability, it’s mind-boggling that Rocket Companies doesn’t get more attention on Wall Street.
Not only is RKT stock a terrific value, but it’s also an unexpected ESG investment.
How so? Just recently, Rocket Companies revealed that it’s launching into the solar energy industry by helping Americans make their home more energy-efficient.
Here’s how it will work. The company’s Rocket Cloud Force will serve as solar advisors, helping clients to decide if solar panels are the best choice for their homes.
Then, they’ll connect homeowners to a digital financing application. Once the financing is handled, they’ll facilitate the installation of a solar solution.
The timing of this sun-drenched venture couldn’t be any better, really. According to the Solar Energy Industries Association and Wood Mackenzie (via Rocket Companies), the U.S. solar market is expected to quadruple by 2030.
Moreover, approximately one in eight American homes are projected to have solar energy by 2030.
Therefore, having the Rocket Cloud Force help folks with their solar-panel selection could greatly enhance Rocket Companies’ already sizable bottom line.
The Bottom Line
In 2021, coffee is still for closers and Rocket Companies remains a leader in U.S. mortgage loan origination.
At the same time, Wall Street simply hasn’t picked up on the immense value proposition inherent in RKT stock.
That’s not a problem, but an opportunity. Soon enough, Rocket Companies shares will price in the company’s full value.
Until then, you can let RKT stock be a rock-solid foundation among your ESG-compliant holdings.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
