Investing to Wealth

News broke today that CB Richard Ellis Group (CBG), the large commercial real estate services company, had successfully reworked a credit agreement with lenders that has been weighing on the shares.  CBG stock had been trading in the low $20’s at this time last year, but debt worries and the deterioration of the real estate market have dragged the stock down to the mid-$2 range.  So, this amended credit agreement will give the company a little bit more breathing room.  Accordingly, an analyst at JP Morgan (JPM) upgraded shares to Overweight, and this has propelled the stock to close to 60% gains on the day.  Quoting CNBC’s Squawk on the Street,

“Financials leading this rally, take a look at Richard Ellis announcing that its amending its credit agreement with lenders. Gets an upgrade to overweight from neutral at JP Morgan.”

Surely the stock is not out of the woods yet, as some analysts believe that the commercial real estate “shoe” has yet to drop.  With the unemployment statistics and overall economic growth both predicted to continue to deteriorate, there is an argument that could be made for that.  However, this agreement is a step in the right direction for the embattled stock.  With debt dwarfing the company’s equity as of the last quarterly report at the end of 2008, it is certainly a risky stock to own.  But if it does in fact survive the hard times, then CBG is certainly Undervalued at these levels.

CB Richard Ellis Gets an Upgrade from JPM