8 Cheap Penny Stocks to Buy Right Now

6. Lument Finance Trust, Inc. (NYSE:LFT)

Share Price: $2.52

Forward P/E: 6.33

EPS Growth This Year: 53.80%

Number of Hedge Fund Holders: 5

Lument Finance Trust (NYSE:LFT) is a real estate investment trust that invests in, originates, finances, and manages a commercial real estate debt investment portfolio. Its primary focus is transitional floating-rate CRE mortgage loans while emphasizing middle-market multifamily assets. It also invests in other CRE-related investments, including preferred equity, mezzanine loans, commercial mortgage-backed securities, construction loans, fixed-rate loans, and other CRE debt instruments.

The company’s mortgage loan investment portfolio comprises around 88 senior secured floating rate loans with around $1.4 billion in aggregate unpaid principal balance. Lument Investment Management, LLC externally manages the company. Lument Finance Trust (NYSE:LFT) holds a competitive advantage due to its expertise in the origination, underwriting, and active asset management of multifamily mortgage investments. It also boasts strong sponsorships from the broader Lument and ORIX platforms, positioning it as a value proposition in today’s public markets. Despite the current challenging environment, the company raised its common dividend by $0.01 in June. This represents a 14% sequential increase over Q1.

It also fully deployed its capital into strong, predominantly multifamily credits by the end of 2023. Since then, it has focused on actively managing its loan investment portfolio.

The company has differentiated itself from its market peers by focusing on middle-market multifamily credit, allowing it to deliver a stable and sustainable dividend to its shareholders and preserve shareholder capital. According to the company, multifamily, particularly middle-market multifamily, is expected to remain a strong-performing asset class in the long term despite a modest softening of multifamily fundamentals.

Lument Finance (NYSE:LFT) continually maintains a strong liquidity position, with around $65 million in unrestricted cash on its balance sheet. Persistent elevated short-term rates have allowed the company to produce attractive returns on its cash balance. Intentionally adopting a defensive cash position, Lument Finance (NYSE:LFT) has gained the flexibility to manage the more challenging credits in its portfolio.