Real Estate Investment Funds (REITs) are considered a savvy alternative investment to stocks and bonds, and the next best thing to owning real estate.
What is a REIT?: REITs invest in many sectors, from office buildings to homes, hospitals and hotels. They are tradable on the stock exchange and required to distribute 90% of taxable income to investors through dividends.
Data and Diversification
So far, the MSCI US REIT Index has gained about 15.15% in 2012, and 30.87% over a full year. Job growth is helping the industry by filling the current vacancies, and creating enough new demand to increase rental rates.
“Homebuilders have mostly enjoyed improved sales trends this year, aided by low mortgage interest rates and a decline in the inventory of unsold homes.” reports CNBC. “The pace of foreclosures slowed sharply last year, and banks appear to be holding back from flooding the market with foreclosed properties.”
Business Section: Investing Ideas
If you’re interested in exploring REITs for your portfolio, we created a starting point for your analysis, especially if you’re a contrarian investor:
We started with universe of REIT companies and screened them for the bullish backing of institutional buyers, like hedge funds. It’s understood this investor class has more market and company information than the average investor, so their bullishness is something to take note of.
Then, we looked for REITS that were performing unprofitably relative to their industry average. Specifically, their gross, operating and pretax margins are below that of their peers.
Still, despite this red accounting flag institutional buyers are feeling optimistic on these names. Perhaps they see a trend that will soon benefit these names and reverse these accounting trends.
So what do you think, are institutional buyers on the right track? Use this list as a starting point for your own analysis.
1. Health Care REIT, Inc. (HCN, Earnings, Analysts, Financials): REIT – Healthcare Facilities. Engages in investment, development, and management of properties. Market cap at $12.63B. Net institutional purchases in the current quarter at 13.7M shares, which represents about 6.44% of the company’s float of 212.73M shares. TTM gross margin at 35.06% vs. industry average at 42.66%. TTM operating margin at 35.06% vs. industry average at 40.34%. TTM pretax margin at 13.17% vs. industry average at 21.59%.
2. Mid-America Apartment Communities Inc. (MAA, Earnings, Analysts, Financials): REIT – Residential. Engages in acquiring, owning, and operating apartment communities primarily in the Sunbelt region of the United States. Market cap at $2.74B. Net institutional purchases in the current quarter at 2.8M shares, which represents about 6.88% of the company’s float of 40.69M shares. TTM gross margin at 24.29% vs. industry average at 42.66%. TTM operating margin at 24.29% vs. industry average at 40.34%. TTM pretax margin at 11.19% vs. industry average at 21.59%.
3. Ventas, Inc. (VTR, Earnings, Analysts, Financials): REIT – Healthcare Facilities. Engages in investment, management, financing, and leasing of properties in the healthcare industry. Market cap at $18.9B. Net institutional purchases in the current quarter at 23.4M shares, which represents about 7.97% of the company’s float of 293.59M shares. TTM gross margin at 28.36% vs. industry average at 42.66%. TTM operating margin at 28.36% vs. industry average at 40.34%. TTM pretax margin at 15.95% vs. industry average at 21.59%.
Use the Turbo Chart to compare performance:
Written by Rebecca Lipman. Profitability data sourced from Fidelity, all other data sourced from Finviz.
Use Kapitall’s Tools: Looking for ways to analyze this list?
Use this article snapshot as a launch pad (click here for help): Simply click on the links, and use Kapitall’s tab navigation to browse through the data…
Analyze These Ideas: Getting Started
- Read descriptions for all companies mentioned
- Access a performance overview for all stocks in the list
- Compare analyst ratings for the companies mentioned
- Compare analyst ratings to annual returns for stocks mentioned
- Real-Time Opinion: Scan the latest tweets about these companies (feed will open in a new window)
Dig Deeper: Access Company Snapshots, Charts, Filings
- Health Care REIT, Inc. (HCN, Chart, Download SEC Filings)
- Mid-America Apartment Communities Inc. (MAA, Chart, Download SEC Filings)
- Ventas, Inc. (VTR, Chart, Download SEC Filings)
New to Kapitall?
1. New to the site? Click here to register for a free account, and gain access to more tools and data
2. Looking for more investing ideas like this? Click here to sign up for your free copy of Kapitall Weekly
3. Follow us on SeekingAlpha, Motley Fool, Nasdaq and Twitter
ABOUT KAPITALL WIRE
Kapitall Wire, which is not a broker/dealer, offers free cutting edge investing ideas, lively commentary and timely analysis of companies enhanced by interactive tools. And the Investing 101 section breaks complex concepts down to their basics, offering education to novices that doubles as a refresher course for more seasoned investors.
Kapitall Wire is a division of Kapitall Inc. Securities products and services are offered by Kapitall Generation, LLC, member FINRA/SIPC . Kapitall Generation, LLC is a wholly owned subsidiary of Kapitall, Inc.