7 undervalued REITs to buy with serious profit potential
With volatility in full swing, undervalued REITs or real estate investment trusts are a great option. REITs are a type of investment that allows you to acquire an equity stake in a real estate company. Better, since they are undervalued right now, you can get a lot out of them. Additionally, undervalued REITs tend to outperform the market when it rebounds. So, investing in undervalued REITs is a great option if you’re looking for a way to take advantage of the bear market.
REITs come in different sizes and serve many industries. They don’t just specialize in malls, apartments, offices, or hotels.
Each investor should see their portfolio and ensure that the stock represents their personal needs. Investors should carefully analyze which REIT companies are worth investing in based on their portfolios. With all of that in mind, let’s take a look at some of the best undervalued REITs that trade at high valuations and operate in fantastic sectors, including:
|DLR||Digital Real Estate Trust||$101.93|
|O||Real estate income||$60.26|
American Tower (AMT)
American Tower (NYSE:AMT) is a leading owner, operator and developer of wireless communications and broadcast infrastructure in the United States. The company owns and operates approximately 222,000 communication sites, including cell towers, rooftop antennas and small cell solutions.
The company has a strong track record of consistent cash flow and earnings growth and is well positioned to benefit from the continued expansion of the wireless industry. American Tower also offers a competitive dividend yield of 2.71%, making it an attractive income investment. The REIT recently increased its payout and its quarterly dividend rate is now $1.47 per share, a 2.8% increase from its previous rate of $1.43. Given its undervalued status and fundamentals, American Tower is an excellent investment for long-term investors seeking exposure to the REIT sector.
Digital Real Estate Trust (DLR)
Digital real estate (NYSE:DLR) is a data center provider, with more than 166 data centers in various regions around the world. This global presence enables it to offer tailor-made solutions to the individual needs of its customers.
The Company’s property portfolio consists of approximately 300 buildings and over 35 million leasable square feet. Digital Realty’s client base includes domestic and international companies in various industries, such as content and bandwidth providers, cloud and information technology, financial services, and manufacturing companies.
We’re coming off of a tough year for the tech sector, but there’s still a lot to love about data centers. The data center market is booming and the forecast revenue is expected to reach $321.40 billion by 2022. With an annual growth rate of 5.01% from 2020 to 2026, the market volume will be 410 .40 billion by 2027, according to data from Statista.
Prologis (NYSE:PLD) is a great choice for investors because it operates in a growing industry. The company provides solutions for logistics and distribution needs. It is well positioned to take advantage of the e-commerce trend and also has an international presence.
The company’s second quarter was better than expected, in part due to post-pandemic demand. Given these factors, Evercore ISI Group analyst Steve Sakwa recently upgraded the industrial REIT to Outperform. They say its thriving balance sheet and high-quality portfolio will help it stay afloat during the current economic downturn.
Additionally, Prologis is a REIT, which means it offers investors high dividend yields and the potential for capital appreciation. Prologis is an excellent choice for long-term investors seeking exposure to the logistics sector.
Sales (NYSE:VCR) owns and operates a diverse portfolio of senior housing and healthcare properties, including skilled nursing facilities, assisted living facilities, assisted living facilities, memory care facilities, hospitals and other medical office buildings. It is one of the largest REITs in the healthcare sector and offers investors a unique way to play on the aging population trend.
VTR’s real estate portfolio is extensive and also includes 1,200 residences for the elderly. The REIT leases them to tenants or uses independent third-party managers for their maintenance. The pandemic has done the company a disservice. However, since then, occupancy rates have rebounded. Occupancy rates increased significantly in the second quarter of 2022 to 83.7%, as opposed to March 2021, when occupancy rates fell to 78%.
During and after the second quarter of 2022, Ventas strengthened its liquidity by refinancing its debt and preparing for upcoming payments. The company also received positive credit ratings due to its strong financial position.
Property income (O)
Real estate income (NYSE:O) owns and operates single-tenant, stand-alone commercial properties. The company has leased a diverse portfolio of space to national and regional retailers, restaurants, movie theaters, service providers and other businesses. Realty Income is a triple net rental company, which means the tenant pays all property taxes, insurance costs and maintenance.
This provides Realty Income with a stable and predictable stream of income. Additionally, the company has a strong balance sheet and a long history of profitability. Realty Income is a well-respected name in the commercial real estate industry, and institutional investors largely own its shares. Realty Income is a good option for investors who want exposure to the commercial real estate market.
Realty Income’s strategy is to generate stable and growing monthly dividends from its investments. It has an impressive record of paying 625 consecutive monthly dividends.
Iron Mountain (MRI)
iron mountain (NYSE:IBD) was once famous for storing paper products. However, now things are taking a turn. He is now focusing on data centers since that is where most of the action is. Iron Mountain realized that for the business to stay afloat and relevant, it needs to focus on what’s trending and in demand, what’s the current data storage. Iron Mountain made this transition and change easily and looks forward to helping other companies meet their data needs in the years to come.
For the past few quarters, Iron Mountain’s investments in the digitalization of its storage activity have begun to bear fruit. This creates a more stable base for the company’s growing dividends, which should lead to higher future returns. This makes Iron Mountain an attractive option for passive income seekers.
However, MRI is down double digits over the past six months. Along with the general bearish momentum, stocks are also falling after revealing the growth targets of Project Matterhorn. The company is targeting $7.3 billion in annual revenue for 2026, representing a compound annual growth rate of 10%, and the project will play an important role. But the company will need to cover $150 million in one-time costs from 2023 to 2025. This is also needed for transformation support. The markets don’t seem to be happy with that. Nevertheless, this means that Iron Mountain is among the most undervalued REITs today.
spokesman (NYSE:RYN) is interesting because it is involved in a critical commodity in addition to being a REIT. It does not own offices or recreational properties. Instead, it has huge tracts of timber land.
Rayonier is one of the largest owners of forest land in the world, with nearly three million acres of land under its control. The Company’s holdings are located in the South and Northwest United States and New Zealand.
Rayonier benefits from a two-level business model. First, due to the commodity price spikes we are experiencing, lumber prices will remain high for some time to come. Second, the underlying value of the land will continue to rise at a secular level, becoming a hedge against inflation. It allows the company to maintain a very healthy dividend, which it increased by 5.6% in May.
At the date of publication, Faizan Farooque did not hold (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.