Aimco (AIV) Stock Hits 52-Week High: Right Time to Buy It?

Zacks Equity Research

Shares of Apartment Investment and Management Company (AIV) – better known as Aimco – scaled a new 52-week high of $34.77 on Sep 3. The residential real estate investment trust (:REIT) stock closed the session at $34.73, reflecting a solid year-to-date return of 37.4%. The trading volume for the session was nearly 1.0 million shares.

Despite scaling such high, we believe this Zacks Rank #2 (Buy) stock has the potential to move higher given the improving fundamentals of the apartment sector and superior performance of its properties.  

Growth Drivers

Strong second-quarter results, including improved performance of its same-store properties and a healthy liquidity position, drove the company’s stock price to the new high.

Aimco reported second-quarter 2014 pro forma funds from operations (:FFO) of 52 cents per share on Jul 31, a penny ahead of the Zacks Consensus Estimate and 3 cents above the year-ago quarter figure.

Improved operating portfolio performance, contribution from redevelopment communities and lower offsite costs aided the 6.1% year-over-year rise in pro forma FFO per share. Aimco also increased the lower end of its 2014 pro forma FFO per share guidance range.

The company experienced rent escalations across its key markets, which is encouraging. At the same time, Aimco’s portfolio enhancement activity through continued redevelopments of core assets and disposal of non-core ones, continue to strengthen its position in markets with high-growth potential.

We believe that backed by an improving economy, growth in job count, rising consumer confidence and favorable demographics along its markets, the company would ride on the growth trajectory in the quarters ahead.

Echoing similar sentiments, the Zacks Consensus Estimate over the last 30 days climbed 0.5% to $2.08 per share for 2014, while that for 2015 also advanced 0.5% to $2.23 per share.

Other REITs Scaling Highs

Other REITs that have scaled 52-week highs on Sep 3, include Diamondrock Hospitality Co. (DRH), Pebblebrook Hotel Trust (PEB) and RLJ Lodging Trust (RLJ).

Note: FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.

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