Sun Communities (NYSE:SUI) is real estate investment trust (REIT) that focuses on manufactured housing (MH) communities and recreational vehicle (RV) parks.
The company was founded in 1975 and is headquartered in Southfield, Michigan. It now operates more than 345 communities in 29 states, and Ontario, Canada. It’s now one of the largest REITs in this unique sector.
Generally speaking, REITs of all stripes do well in the current market conditions. Low interest rates and a decent economy mean more people can take a step into home ownership or rent a property in an established community.
And don’t think of manufactured housing as mobile homes. More than 80% of MHs are permanent dwellings. And within those communities there are options to buy or rent.
The thing that makes MHs so compelling now is that they’re more inexpensive than a typical single-family home because you don’t own the property the MH is on.
For example, a 1,500 square foot MH may only cost $70,000 because the property is leased. A similarly sized single-family home in that area would cost double that since the owner is also buying the land.
What’s more, people who buy into these communities also tend to stay. Retirees that are downsizing and just want a base of operations, workers that can now get out of rentals and into their own home, or people on fixed income are more likely to settle in than move on.
That’s why SUI’s occupancy rates are a stunning 98.2% according the company’s recent Q2 earnings report.
SUI Stock and a Strong Q2
And the other aspect of SUI’s business – RV communities – are also in the midst of bull market. RV sales have been up for a few years now and there are more people downsizing and hitting the open road. And for some that means home is an MH community and their holidays are spent in RV communities that are both owned by SUI. Younger people are also getting in on the RV life.
All this is evident in SUI’s recent Q2 earnings. The company reported very strong numbers across the board. All the keys to success showed that SUI is continuing to deliver. Earnings were up, revenues were up, and profits doubled from the same quarter a year ago. This is all great news for SUI stock.
Analysts as well as the company are just as bullish moving forward, given the fact that its biggest quarter hasn’t been reported yet.
What’s more, this specific sector of REITs is also one of the safest. That means, if you’re a bit wary of the bullish market’s rise to new highs, this will provide you with growth on the upside and safety for any downside.
The stock is up 33% year to date, 40% in the past 12 months, and it’s still delivering a nearly 2.3% dividend. That’s beating inflation at this point. SUI stock is a solid long-term stock that will help in good times and bad.
Louis Navellier is a renowned growth investor. He is the editor of four investing newsletters: Growth Investor, Breakthrough Stocks, Accelerated Profits and Platinum Growth. His most popular service, Growth Investor, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
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