The real estate market is expected to grow amid a resilient rental market, and evolving demands in residential and commercial sectors. Therefore, fundamentally strong real estate stocks, AMREP Corporation (AXR), FirstService Corporation (FSV), and Jones Lang LaSalle Incorporated (JLL) might be worth watching.
The global real estate market is expected to grow at a CAGR of 1.8% by 2033. The market is experiencing steady growth driven by rapid urbanization, changing lifestyle trends, e-commerce growth, inflating disposable incomes of individuals, infrastructure development and improvements, remote work, demographic shifts, and favorable government policies.
The increasing use of technology in the real estate sector is further driving the real estate market growth. Utilization of dedicated apps and websites is enabling easier access to a wider range of properties with virtual reality offering immersive experiences remotely. Through technology, users can browse real estate located anywhere in the country and streamline the various rental and purchasing processes.
Considering this favorable backdrop, let’s assess the fundamentals of the three Real Estate picks.
Stock #3: AMREP Corporation (AXR)
AXR engages in the real estate business in the United States. It operates through two segments, Land Development and Homebuilding. The company markets and sells developed and undeveloped lots to homebuilders, commercial, and industrial property developers through brokers.
AXR’s 111.9% trailing-12-month FFO to gross margin is 78.8% higher than the industry average of 62.58%. Furthermore, the stock’s 5.63% trailing-12-month ROTC is 164.5% higher than the industry average of 2.13%.
AXR’s revenues for the first quarter ended July 31, 2024, was reported at $19.09 million, up 85.5% year-over-year. Net income grew 200.7% year-over-year to $4.06 million. Earnings per share increased 204% year-over-year to $0.76.
The stock gained 67.5% over the past nine to close the last trading session at $35.40.
AXR’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
AXR also has a B grade for Sentiment and Growth. It is ranked #4 out of 46 stocks in the Real Estate Services industry.
Beyond what is stated above, we’ve also rated AXR for Momentum, Stability, Quality, Value. Get all AXR ratings here.
Stock #2: FirstService Corporation (FSV)
FSV provides residential property management and other essential property services to residential and commercial customers in the United States and Canada. It operates through two segments: FirstService Residential and FirstService Brands.
In terms of the trailing-12-month interest coverage, FSV’s 4.07% is 124.6% higher than the 1.81% industry average. Its 2.63% trailing-12-month ROTA is 62.3% higher than the 1.62% industry average.
FSV’s revenues for the fiscal third quarter that ended September 30, 2024, increased 6.5% year-over-year to $1.40 billion. Adjusted net earnings and adjusted earnings per share stood at $73.77 million and $1.63, up 31% and 30.4% year-over-year, respectively.
For the third quarter ending September 2024, GLPI’s revenue is expected to increase 25% year-over-year to $385.19 million. Its FFO for the same quarter is expected to increase 3% year-over-year to $0.97. GLPI surpassed the consensus revenue estimates in each of the trailing four quarters.
FSV gained 35.6% over the past six months to close its last trading session at $194.80.
FSV has an overall B rating, equating to a Buy in our proprietary rating system.
FSV has an A grade for Growth and a B for Sentiment and Stability. It is ranked #3 out of 46 stocks in the same industry.
For additional FSV’s Momentum, Quality, and Value, click here.
Stock #1: Jones Lang LaSalle Incorporated (JLL)
JLL operates as a commercial real estate and investment management company. It engages in the buying, building, occupying, managing, and investing in a commercial, industrial, hotel, residential, and retail properties in Americas, Europe, the Middle East, Africa, and the Asia Pacific.
On November 19, 2024, JLL and Slate Asset Management announced a joint venture to commercialize Slate's best-in-class technology platform for commercial real estate (CRE) professionals. The result is JLL Asset Beacon, a software-as-a-service (SaaS) technology platform that integrates data across asset management functions to create a real-time, end-to-end view of performance—whether it's a single asset, fund, or the entire portfolio.
JLL’s 5.72% trailing-12-month interest coverage is 215.7% higher than the industry average of 1.81%. Furthermore, the stock’s 2.68% trailing-12-month ROTA is 65.7% higher than the industry average of 1.62%.
JLL’s revenue increased 15% year-over-year to $1.14 billion during the second quarter ended September 30, 2024. Its adjusted EBITDA rose 78% from the year-ago value to $151.90 million. The company’s net income increased 161% year-over-year to $154.80 million and grew 160.2% year-over-year to $3.20.
Street expects JLL’s revenue for the fourth quarter ended December 2024 to increase 11.4% year-over-year to $6.55 billion. For the same quarter, the company’s EPS is expected to grow 38.3% year-over-year to $5.85. Furthermore, the company surpassed the consensus EPS estimates in each of the trailing four quarters.
JLL’s stock has gained 51% over the past nine months and 81.7% over the past year to close the last trading session at $282.22.
It’s no surprise that JLL has an overall rating of A, which translates to Strong Buy in our POWR Ratings system.
JLL has a B grade for Growth, Sentiment, and Quality. It is ranked first out of 46 stocks in the same industry.
For additional JLL’s Momentum, Stability, and Value, click here.
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AMT shares were trading at $209.00 per share on Friday afternoon, down $0.30 (-0.14%). Year-to-date, AMT has declined -0.79%, versus a 27.97% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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