S&P 500   5,069.53 (-0.38%)
DOW   39,069.23 (-0.16%)
QQQ   436.55 (-0.05%)
AAPL   181.16 (-0.75%)
MSFT   407.54 (-0.68%)
META   481.74 (-0.47%)
GOOGL   137.57 (-4.44%)
AMZN   174.73 (-0.15%)
TSLA   199.40 (+3.87%)
NVDA   790.92 (+0.35%)
NIO   5.65 (+4.63%)
AMD   176.01 (-0.29%)
BABA   76.51 (+0.72%)
T   16.59 (-1.25%)
F   11.95 (-1.57%)
MU   89.46 (+4.02%)
CGC   3.47 (+3.27%)
GE   154.77 (+0.94%)
DIS   107.69 (-0.05%)
AMC   4.45 (+0.23%)
PFE   27.18 (-2.09%)
PYPL   59.33 (+0.29%)
XOM   104.25 (+0.39%)
S&P 500   5,069.53 (-0.38%)
DOW   39,069.23 (-0.16%)
QQQ   436.55 (-0.05%)
AAPL   181.16 (-0.75%)
MSFT   407.54 (-0.68%)
META   481.74 (-0.47%)
GOOGL   137.57 (-4.44%)
AMZN   174.73 (-0.15%)
TSLA   199.40 (+3.87%)
NVDA   790.92 (+0.35%)
NIO   5.65 (+4.63%)
AMD   176.01 (-0.29%)
BABA   76.51 (+0.72%)
T   16.59 (-1.25%)
F   11.95 (-1.57%)
MU   89.46 (+4.02%)
CGC   3.47 (+3.27%)
GE   154.77 (+0.94%)
DIS   107.69 (-0.05%)
AMC   4.45 (+0.23%)
PFE   27.18 (-2.09%)
PYPL   59.33 (+0.29%)
XOM   104.25 (+0.39%)
S&P 500   5,069.53 (-0.38%)
DOW   39,069.23 (-0.16%)
QQQ   436.55 (-0.05%)
AAPL   181.16 (-0.75%)
MSFT   407.54 (-0.68%)
META   481.74 (-0.47%)
GOOGL   137.57 (-4.44%)
AMZN   174.73 (-0.15%)
TSLA   199.40 (+3.87%)
NVDA   790.92 (+0.35%)
NIO   5.65 (+4.63%)
AMD   176.01 (-0.29%)
BABA   76.51 (+0.72%)
T   16.59 (-1.25%)
F   11.95 (-1.57%)
MU   89.46 (+4.02%)
CGC   3.47 (+3.27%)
GE   154.77 (+0.94%)
DIS   107.69 (-0.05%)
AMC   4.45 (+0.23%)
PFE   27.18 (-2.09%)
PYPL   59.33 (+0.29%)
XOM   104.25 (+0.39%)
S&P 500   5,069.53 (-0.38%)
DOW   39,069.23 (-0.16%)
QQQ   436.55 (-0.05%)
AAPL   181.16 (-0.75%)
MSFT   407.54 (-0.68%)
META   481.74 (-0.47%)
GOOGL   137.57 (-4.44%)
AMZN   174.73 (-0.15%)
TSLA   199.40 (+3.87%)
NVDA   790.92 (+0.35%)
NIO   5.65 (+4.63%)
AMD   176.01 (-0.29%)
BABA   76.51 (+0.72%)
T   16.59 (-1.25%)
F   11.95 (-1.57%)
MU   89.46 (+4.02%)
CGC   3.47 (+3.27%)
GE   154.77 (+0.94%)
DIS   107.69 (-0.05%)
AMC   4.45 (+0.23%)
PFE   27.18 (-2.09%)
PYPL   59.33 (+0.29%)
XOM   104.25 (+0.39%)

The 3 Most Promising Real Estate Stocks to Watch this Quarter

Real Estate stocks

Key Points

  • According to analysts, as the real estate market calls for a capital pivot, investors have a unique opportunity to get in on the names that promise the most upside.
  • The standard message lies across growth in rental income, investing heavily into discounted quality assets, and a cyclical wave of appreciation. And remember the juicy inflation-beating dividends.
  • Value investors looking to gain potential exposure to real estate without the in-person hassle may get it here.
  • 5 stocks we like better than Zillow Group

Real estate is one of the backbones of the American economy. As the latter begins to pivot into a cycle of uncertainty amid FED rate hikes and inflationary concerns, the housing market will surely receive its fair share of the money flow.

Considering that the Vanguard Real Estate ETF NYSEARCA: VNQ has underperformed the broader S&P 500 index by as much as 23% during the past twelve months, investors can begin to get an idea as to why there may be more upside potential within this sector when compared to other pockets of the overall economy.

Now that construction activity has picked up in the past quarter, judging by the number of housing starts seen during the period, these real estate stocks are nothing but well-positioned to benefit from the ensuing demand these new housing units will bring to their respective business models.

Apartment Income REIT

Real Estate Investment Trusts (REITs) derive a good chunk of their valuations from the underlying valuations of the very properties that the portfolio holds; considering that Apartment Income REIT NYSE: AIRC stock is trading near its all-time low, investors can safely assume that this portfolio of properties may be undervalued today.

This safe assumption will become more of an educated guess once analyst ratings are thrown into the equation. A consensus upside potential of 25.5% from today's prices will be one of the tipping points bringing this bottoming stock back to its former glory.

Free cash flow (operating cash flow minus capital expenditures) is the lifeblood of any business, as these funds enable management to reinvest into operations and reward shareholders via programs like dividends and share repurchases. FFO (funds from operations) will be the equivalent metric in real estate.

According to Apartment Income's second quarter 2023 earnings results, FFO rose by an impressive 13.7% over the past twelve months. The industry is not known for growth, as appreciation and rent inflation seldom add up to double digits when put together, making this advance a clear outlier.


Management has also guided toward using a significant portion of proceeds to acquire new properties through the end of 2023, indicating that - as seen in the stock price - there are cheaply valued properties to be scooped up for investors.

New properties will automatically translate into the drivers behind this recent potential rally. As the portfolio held by this REIT grows, so will its underlying valuation; additionally, rental income from added properties will also rise. 

Considering that this stock pays an annual dividend yield of 5.5% can give those investors a final push as they feel a potential purchase in this REIT portfolio. Inflation beating dividends with double-digit upside in stock price? Jealous neighbors inbound.

Independence Realty Trust 

While not near an all-time low like Apartment Income, Independence Realty Trust NYSE: IRT still allows investors to potentially accumulate some shares at support levels.

The stock chart will show this company hovering near its $14 to $16 a share support levels. As history rhymes, analysts are piling in to give markets their opinions surrounding potential upside.

According to Independence Realty analyst ratings, there is currently a 25.4% consensus upside from today's prices. Investors wondering why the stock has such a bullish view may find answers within the company's financials.

Looking within the second quarter 2023 earnings results, a few highlights will jump out to investors to help them understand these price targets. The headlines start with a massive improvement in net income, going from a loss of $7.2 million to a net gain of $10.7 million in only twelve months.

While a lower % growth rate of 6.2% in rental income falls short of Apartment Income's double digits, these are still inflation-beating growth rates above industry standards. Management highlighted the levels of expected FFO for the full-year 2023 period, calling for a higher valuation as well.

A renovation program, which management calls the "Value Add Program," is the cherry on top of this new rally cake. By investing in current properties in the portfolio, the company has achieved a 16.2% return on capital in terms of valuation and increased the monthly rental income per unit renovated.

Investors should now get used to the fact that a higher rental income, alongside increasing valuations in underlying properties, will lead to a stock price upside. This is why a dividend yield of 4% is just another reason to wrap a check around these shares.

Cousins Properties 

The real sunbelt trophy, Cousins Properties NYSE: CUZ, takes the cake with a 5.8% annualized dividend yield. As the sunbelt area, characterized by states like Florida, Georgia, South Carolina, and Texas, provides the most upside potential for growth, this stock carries the same upside.

This stock chart will show a different tune to previous names, as the all-time low was recently hit, and management must find ways to turn the ship around. Analysts seem to be on board with the latest developments and value propositions.

Cousins Properties analyst ratings are shooting for a consensus 20.4% upside, a hat trick for double-digit potential in the sector. 

The second quarter of 2023 brought investors a 10% advance in net rental revenues, a sign that office building properties are on a comeback, especially now that a few select names like Zillow NASDAQ: Z are calling their employees back to in-person work.

This name presents investors with double-digit potential of gaining exposure to the ignored corner in real estate, office buildings. Those looking for value may get it.

 

 

 

 

 

 

 

 

 

 

 

→ This is the #1 Stock to Buy for the AI Tidal Wave (From Chaikin Analytics) (Ad)

Should you invest $1,000 in Zillow Group right now?

Before you consider Zillow Group, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Zillow Group wasn't on the list.

While Zillow Group currently has a "Hold" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

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Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Vanguard Real Estate ETF (VNQ)N/A$83.88-1.1%3.85%28.40N/AN/A
Apartment Income REIT (AIRC)
4.8281 of 5 stars
$30.22-2.6%5.96%7.14Moderate Buy$38.00
Independence Realty Trust (IRT)
3.9515 of 5 stars
$14.48-3.1%4.42%-206.83Moderate Buy$16.60
Cousins Properties (CUZ)
3.7747 of 5 stars
$22.57-1.2%5.67%41.04Hold$24.00
Zillow Group (Z)
0.7192 of 5 stars
$53.67+0.3%N/A-78.93Hold$55.50
Compare These Stocks  Add These Stocks to My Watchlist 

Gabriel Osorio-Mazilli

About Gabriel Osorio-Mazilli

  • gosoriomazzilli@gmail.com

Contributing Author

Value Stocks, Asian Markets, Macro Economics

Experience

Gabriel Osorio-Mazilli has been a contributing writer for MarketBeat since 2023.

Areas of Expertise

Value investing, long/short trading, options, emerging markets

Education

CFA Level I candidate; Goldman Sachs corporate training; independent courses

Past Experience

Analyst at Goldman Sachs, associate at Citigroup, senior financial analyst in real estate


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