The stock market’s strong run over the past few years brought attention to high-flying growth stocks, usually from the technology sector, that were consistently outpacing the market. However, fresh uncertainty within the last few months has shifted some focus back towards other investment strategies, and now it might be time for investors to check out things like real estate investment trusts, or REITs.
REITs are companies that own, operate, or finance real estate properties that produce income, such as apartment complexes or retail locations. These companies are heavily regulated and must meet a number of qualifications to be classified as a REIT, but they do offer investors a few distinct advantages.
First of all, real estate can be a very profitable investment sector when certain economic conditions are present. What’s more, REITs must pay at least 90% of their taxable income in dividends to shareholders, so they are a great option for income investors looking for steady payouts.
Luckily for Zacks readers, the proven Zacks Rank—which emphasizes earnings estimates and estimate revisions—works with REITs just as it would with any other company. The strongest REITs are going to be those with improving outlooks and great Zacks Ranks.
With that said, check out the REITs that are model says are impressive options right now:
1. Life Storage, Inc. (LSI)
Life Storage fully integrated REIT which acquires and manages self-storage properties. Locations are now under the Life Storage brand, having shifted over from Sovran Self Storage and Uncle Bob's Self Storage. The company is one of the five largest self-store brands in the world.
LSI currently sports a Zacks Rank #2 (Buy) and presents a dividend yield 4.4%. The stock has shed about 10% from the 52-week highs it reached in late August, but the fundamentals look strong at these levels as earnings estimates trend higher. Plus, LSI has a beta of just 0.4 and should serve as a great low-volatility option in current conditions.
2. MGM Growth Properties (MGP)
MGM Growth owns 13 gaming properties, most of which are operated by casino giant MGM. This portfolio includes a number of iconic Las Vegas casinos, including The Mirage, Mandalay Bay, and New York-New York. The business is primarily structured through NNN leases, which means it is more protected from one-time or unexpected costs.
MGP is currently sporting a Zacks Rank #1 (Strong Buy) and an “A” grade in the Value category of our Style Scores system. The stock has a P/E of 13.0 and a PEG of 1.3. These are both nice discounts to the respective industry averages. Meanwhile, the firm is expected to grow its full-year funds from operations (FFO) by nearly 7.5% in 2018.
3. Gaming and Leisure Properties, Inc. (GLPI)
Gaming and Leisure Properties is an owner of regional casino properties leased to the likes of Boyd Gaming, Eldorado Resorts, and Penn National. All in all, the company owns 44 gaming properties. GLPI is another #1 (Strong Buy) stock and yields about 7.3% right now.
Analysts expect GLPI to witness long-term annualized FFO growth of 10.7%. The valuation remains attractive at a P/E of 11.1 and PEG of 1.0, and it is a relatively low beta option.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Life Storage, Inc. (LSI) : Free Stock Analysis Report
MGM Growth Properties LLC (MGP) : Free Stock Analysis Report
Gaming and Leisure Properties, Inc. (GLPI) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research