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The real estate sector includes companies that own, develop, and manage residential, commercial, and industrial properties. Each of these three segments of the real estate sector includes publicly traded real estate investment trusts (REITs). REITs are vehicles that legally allow individual investors to buy shares in commercial real estate portfolios that receive income from a variety of properties. REITS’ key metric is funds from operations (FFO), a measure of earnings particular to the industry. Some big names within the sector include American Tower Corp. (AMT) and Public Storage (PSA). The real estate sector, as measured by the Real Estate Select Sector ETF (XLRE), has outperformed the S&P 500 over the past 12 months. XLRE posted a 12-month trailing price change of 20.8% versus the S&P’s 16.8%. All figures are as of February 25, 2020.
Below, we’ll take a look at the top three real estate stocks for best value, fastest earnings growth, and most momentum.
Best Value Real Estate Stocks
Here are the real estate stocks in the S&P 500 with the lowest 12-month trailing price-to-earnings (P/E) ratio in the sector. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
- Vornado Realty Trust: Vornado Realty Trust is a REIT. The trust owns, manages, and leases properties primarily located in the New York City metropolitan area. For Q4 2019, Vornado posted net income attributable to common shareholders of $193.2 million, up 92.3% year-over-year (YOY).
- Host Hotels & Resorts Inc.: Host Hotels & Resorts operates as a REIT engaged in the management of luxury and upper-upscale hotels.
- Apartment Investment & Management Co.: A self-administered REIT, Apartment Investment & Management owns and manages a portfolio of apartment complexes in the U.S. and Puerto Rico. In December, the company reported the average daily occupancy for its properties was extremely healthy at 97.9%.
Fastest Growing Real Estate Stocks
Here are the real estate stocks in the S&P 500 with the highest YOY earnings per share (EPS) growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders.
- Apartment Investment & Management Co.: See company description above.
- Digital Realty Trust Inc.: Another example of a REIT, Digital Realty Trust owns and manages technology-focused real estate properties across the U.S. and England. Earlier in February, the company announced plans to acquire a 49% interest in the Westin Building Exchange, a 34-story interconnection hub located in Seattle.
- Duke Realty Corp.: With properties in the southeastern, midwestern, and southern U.S., Duke Realty is focused mainly on industrial and office spaces. The company owns and operates roughly 155 million square feet of rentable space across its industrial properties.
Real Estate Stocks with the Most Momentum
These are the real estate stocks in the S&P 500 that had the greatest total return over the past 12 months.
|Real Estate Stocks with the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|SBA Communications Corp. (SBAC)||295.51||33.3||62.4|
|Equinix Inc. (EQIX)||644.90||55.10||53.5|
|Mid-America Apartment Communities Inc. (MAA)||145.91||16.7||44.1|
|S&P 500 (SPY)||N/A||N/A||16.8|
|Real Estate Select Sector SPDR (XLRE)||N/A||N/A||20.8|
- SBA Communications Corp.: SBA Communications owns and operates wireless communications infrastructure. SBA Communications leases antenna space to various wireless service providers. The company has grown its portfolio at a rapid clip, adding nearly 1,500 sites during Q4 2019 alone.
- Equinix Inc.: Equinix is a REIT that provides colocation space and related services. The company provides customers with access to a selection of business partners and solutions based on their colocation, interconnection, and managed IT service needs.
- Mid-America Apartment Communities Inc.: The company is a REIT that owns, develops, and manages multi-family apartment buildings, Mid-America Apartment Communities operates across the southeastern and midwestern portions of the U.S. In Q4 2019, the company reported net income available for common shareholders of $148.7 million, up 146.2% YOY.
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