In this article, we shall discuss the top 10 REIT stocks under $10. To skip our detailed analysis of the real estate investments sector in 2022, go directly and see Top 5 REIT Stocks Under $10.
With no end in sight to the ongoing global macroeconomic crisis, the stock market and industries all over the world are incredibly distressed. Supply chain disruptions exacerbated by Russia's invasion of Ukraine and central banks tightening their monetary policies have resulted in global economic expansion projections declining to 3.2% in 2022, according to a report by Bloomberg. According to the latest economic outlook report by the Organization for Economic Cooperation and Development (OECD), inflation is the worst it has been since the economic depression of the 1980s. The report suggested that global economic activity shall remain downcast for the rest of 2022. According to the report, 2023 will see a massive drop of $2.8 trillion in the global GDP. This will lead central banks to further tighten their monetary policies in an effort to reduce inflation and introduce measures which could topple several major economies into a major recession.
In this situation, investors are searching for safe options to shield themselves from the rising inflation and interest rates. REITs are under investors' radar amid all of this. Although certain REITs, such as mortgage REITs, are susceptible to interest rates and macroeconomic influences, other REITs like ones that invest in infrastructure, retail chains, and healthcare are relatively less turbulent and have significant defensive properties which make them a safe and stable investment opportunity.
Some of the most prominent players in the REIT sector are Realty Income Corp. (NYSE:O), Simon Property Group (NYSE:SPG) and American Tower Corp. (NYSE:AMT). In this article, however, we shall be going over the top 10 REIT stocks, priced under $10, to buy.
Unsplash Our Methodology
For this article, we tracked the data of over 895 hedge funds for the second quarter of 2022. From this data, we picked 10 top REIT stocks with a share price of $10 or less. The price of each stock was noted on September 27.
The stocks have been ranked based on the number of hedge funds which hold stakes in them, from lowest to highest.
Top 10 REIT Stocks Under $10
10. SITE Centers Corp. (NYSE:SITC)
Number of Hedge Fund Holdings: 16 Share Price (As of September 27): $9.92
Based in Beachwood, Ohio, SITE Centers Corp. (NYSE:SITC) is a publicly traded real estate investment trust that invests in shopping centers. As of December 2021, the company owns more than 200 shopping centers in the United States. As of the second quarter of 2022, Israel Englander's Millennium Management is the largest stakeholder in the stock, having a stake value of $20.32 million.
On September 25, Mizuho analyst Haendel St. Juste upgraded Site Centers (NYSE:SITC) to Buy from Neutral with a price target of $17, up from $15. The analyst cited the company's core growth, signed pipeline, minimized leverage and opportunistic balance sheet. Q2 2o22 earnings were strong for the shopping center REIT stock, with the company posting an EPS of $0.27 in the second quarter of 2022, beating estimates of $0.04 by $0.23. Furthermore, Site Centers (NYSE:SITC) posted a revenue of $140.7 million. The analyst believes Site Centers' (NYSE:SITC) portfolios, with a strategy geared towards defense and a focus on internal growth, hold the highest chances of outperformance as recession risk intensifies.
9. Summit Hotel Properties (NYSE:INN)
Number of Hedge Fund Holdings: 16
Share Price (As of September 27): $7
Based in Austin, Texas, Summit Hotel Properties (NYSE:INN) is a leading publicly-traded lodging real estate investment trust focused on high-end, deluxe hotels. As of the second quarter of 2022, investor interest in Summit Hotel Properties (NYSE:INN) increased, with 16 hedge funds long the stock, compared to 15 in the preceding quarter. Citadel Investment Group is the largest shareholder in the stock, having stakes worth $14.04 million. The preferred dividends have a coverage ratio of more than 500% based on Q1 2022 earnings.
The company's performance has undergone a continuous improvement during Q2 2022, with the stock digesting a large acquisition of a 27 hotel portfolio for $777 million. This acquisition will contribute to the financial results which will be posted for the third quarter. Though the company is not as big a player as Realty Income Corp. (NYSE:O), Simon Property Group (NYSE:SPG) or American Tower Corp. (NYSE:AMT), the recent improvement in Summit's (NYSE:INN) Q2 2022 performance, and the favorable projections for Q3 2022, make it one of the best bets in the REIT sector.
8. The GEO Group Inc. (NYSE:GEO)
Number of Hedge Fund Holdings: 17 Share Price (As of September 27): $7.38
Headquartered in Boca Raton, Florida, The GEO Group Inc. (NYSE:GEO) is a publicly traded company which focuses on the development, construction, and investment in private prisons and mental health facilities all over the world. The GEO Group Inc. (NYSE:GEO) has also curated programs to reduce recidivism, facilitating prisoners in returning to civilian life by providing therapy, life skills courses, job training, and housing assistance.
GEO Group (NYSE:GEO) has managed to maintain investor interest in Q2 2022, with 17 hedge funds long the stock. Mason Capital Management is the largest shareholder in The GEO Group Inc. (NYSE:GEO), having a total stake value of $38.16 million. The company has refinanced its debt, leaving ample room for a dividend payment or share buyback program. The impressive financial position of the stock, the ability to commence a share buyback program, and the resolve to pay dividends, make GEO (NYSE:GEO) one of the best real estate stocks to buy.
7. CoreCivic Inc. (NYSE:CXW)
Number of Hedge Fund Holdings: 17 Share Price (As of September 27): $8.89
Based in Brentwood, Tennessee, CoreCivic Inc. (NYSE:CXW) is a company which owns and operates private prisons and detention centers. As of 2022, it is the second largest private corrections company in the United States, managing more than 65 state and federal correctional and detention facilities.
Investors should not be misled by the company's dismal history concerning stock returns, considering the fact that the real estate trust's negative history was due to CoreCivic's (NYSE:CXW) massive loans, which the company had not cleared timely. However, the company's total debt has declined substantially, and debt maturities are still a long way into the future. Liquidity is significantly strong for the coming years. On September 1, it commenced an expansive share buyback program, with a yield of more than 15% as of Q2 2022. This will decrease share availability and is likely to boost the stock price.
Investor interest around CoreCivic Inc. (NYSE:CXW) increased in the second quarter of 2022, with 17 hedge funds long the stock. This was up significantly compared to Q1 2022, in which 15 hedge funds held stakes in CoreCivic Inc. (NYSE:CXW). Mason Capital Management is the largest stakeholder in the stock, having a stake of $40.65 million. As of September 27, the company has a price-to-earnings ratio of 12.61.
6. Sunstone Hotel Investors Inc. (NYSE:SHO)
Number of Hedge Fund Holdings: 18 Share Price (As of September 27): $9.62
Sunstone Hotel Investors Inc. (NYSE:SHO) is a lodging real estate investment trust. The company pursues a strategy to create long-term stakeholder value through acquisitions and active ownership of hotels considered to be Long-Term Relevant Real Estate. Sunstone Hotel Investors' (NYSE:SHO) hotels are primarily in the premium, 7-star segment, and operate under well-known, deluxe brands such as Marriott, Hilton, Hyatt, Fairmont, and Sheraton. The company beat EPS estimates of $0.06 by $0.09 in Q2 2022, posting an EPS of $0.15.
On August 11, Evercore ISI analyst Duane Pfennigwerth assumed coverage of Sunstone Hotel Investors Inc. (NYSE:SHO) with an Outperform rating and a price target of $13.50, down from $14. According to the analyst, lodging revenue is steadily returning to pre-pandemic peaks. Even though equity markets have grown increasingly cautious, the company's fundamentals maintain the recovery trajectory, said Pfennigwerth. Moreover, the company has a reputation for maintaining an immaculate balance sheet, with the analyst contending that the decreased levels of debt make the risk/reward ratio of the preferred shares very impressive.
Just like Realty Income Corp. (NYSE:O), Simon Property Group (NYSE:SPG) and American Tower Corp. (NYSE:AMT), Sunstone Hotel Investors Inc. (NYSE:SHO) is one of the best REIT stocks to invest in in 2022.
Here is what Baron Funds had to say about Sunstone Hotel Investors Inc. (NYSE:SHO) in their Q2 2022 investor letter:
“Exceptionally strong leisure demand and the resumption of business travel are contributing to robust business fundamentals for the Fund’s hotel REIT investment in Sunstone Hotel Investors, Inc. (NYSE:SHO). Given that economic worries have now emerged, we are closely monitoring business fundamentals and our hotel REIT investments. At their current share prices, however, we believe the company is valued at steep discounts to replacement cost and our assessment of intrinsic value.”
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Disclosure: none. Top 10 REIT Stocks Under $10 is originally published on Insider Monkey.