Tiptree Inc. stock has surged 103% higher since late February. But there are plenty more gains where that came from.

In fact, we recommended Tiptree as a cheap stock with powerful upside earlier this summer. Readers who caught it on July 8 would have booked a nearly 20% gain since then. The reason for the latest jump in share price is simple. Tiptree Inc. (TIPT) notched a solid $8 million of profit during their latest earnings report. That came on the back of nearly $300 million in quarterly revenue.

Even with the latest jump in price, Tiptree trades for a nearly unheard of 5.96 price-to-earnings ratio, meaning this stock is still undervalued. The current estimated PE ratio for the Russell 2000 index, the small-cap index Tiptree is part of, is 33.43. That means Tiptree is about six times cheaper than the average small-cap.

That's why it's still a great cheap stock to buy, even with its recent gains. Here's why this stock can reach that potential.

Why Tiptree Stock Can Go Even Higher

One of the main reasons Tiptree is able to turn a solid profit is its business model. They have their hands in a number of lucrative sectors.

For one, they own Tiptree Capital. This is an investment bank that also issues mortgages. The housing market is red-hot right now, with median home prices hitting record highs in June. Not only does that mean more interest payments going to Tiptree as home prices rise and people take larger loans, but it means they have their pick of qualified applicants. These aren't the risky mortgages at the center of the 2007 crisis.

They're also in niche, high-margin insurance. They insure things like extended car warranties, credit, appliances, furniture, and electronic products. These are high margin since the majority of people rarely use these polices once bought and the limit on how much Tiptree has to pay out is capped.

What's even better is the company itself thinks the share price is too low for the kind of profit potential they have. The company has bought over 23 million shares of Tiptree stock over the last year. That sort of a buyback strategy is a bright, flashing bullish signal.

The people who know the company the best think the best investment they can make is buying more shares of their own stock. That's a win-win for shareholders. And that's on top of a 1.5% dividend yield. It's one of the rare low-priced stocks with a dividend.

There's more upside ahead for Tiptree, and a return to its 2021 highs isn't out of the question after the latest earnings report. That could make for a quick 44% gain.