Retail REIT Play - BUY Recommendation!
The major indices are all trading significantly higher as stocks continued yesterday's bounce this morning. The Nasdaq has been leading the way higher gaining nearly 2% thanks to the snapback rally, as inflation fears eased due to the weaker-than-expected economic indicators. Disney (DIS) reported mixed earnings yesterday after the closing bell, and due to the firm's weak subscriber numbers and revenues, its stock opened deep in the red, but that wasn't enough to spoil the bullish momentum.
In economic news, retail sales slightly missed expectations following last month's historic stimulus-fueled surge, with headline sales coming in flat and core sales dropping by 0.8%. On the bright side, last month's readings were revised even higher, but since industrial production and the Michigan consumer sentiment number also missed, it's no surprise that Treasury yields dropped across the curve in early trading.
Stock Pick Summary:
We continue to play the short term market uncertainty to our advantage, and pick top quality stocks for the long term. Today, we diversify into a promising Real Estate REIT that offers a Dividend of 3.80%. So while the market dances around, we sit back and cash on the dividend. While the coronavirus pandemic quickly devastated the retail sector, it weathered the storm quite well. In 2020, it rang up top-line sales of $248.6 million, up almost 33% from the prior year’s tally. Net income was $91.4 million, up 14% from 2019’s result.
One key reason was that its clientele heavily features essential businesses, such as grocery stores, auto parts and repair stores and big-box retailers. In addition, it has widespread coverage across almost all of US. We expect it to grow its earnings at a rate of 15% annually due to its aggressive rent collection strategy and efficient tenant selection. It has a long history of developing properties for high quality retailers and has historically generated great returns on investment.
Acquisitions will be another channel for its growth. Troubled tenants always pose a risk to its success, which it may have to counter using negotiations, dispositions, and re-tenanting. This is unlikely to be a multi-bagger, but yet, a welcome addition to our top class diversified portfolio.
We don't recommend over investing in any stock. Consider starting with a small amount, say 2-3% of your portfolio's overall value, and add a little at a time.
You could invest as low as $200-$500 on a pick, and even buy just 1 or 2 shares, if you are new to investing, low on cash or just prefer going slow.
For best results, have an intention to hold your position for at least 2 - 3 years in general. However, you can always lock profits sooner if you prefer as every investor has a unique portfolio and different goals.
Consider investing in our multiple stock picks (the more the better).
The most successful members look to mirror our portfolio as much as possible.
Besides the new stock pick, you may also consider diversifying amongst some of the earlier picks from our market crushing portfolio.
Be patient and don't allow daily market swings to unnerve you. Remember, we have a pristine track record over last 10 years, so Buzz with confidence and patience.
If you liked this pick and/or plan to open a position in it, please press the Like (Heart) Button below the post.