REITs or real estate investment trusts are most appropriate for investors looking for a steady income stream and hedging their portfolios against the current inflation and a potential recession. That’s because REITs must pay 90% of their taxable income to shareholders through dividends. Moreover, REITs perform well in an inflationary environment because the value of their properties increases.
The consumer price index increased 9.1% in June from a year ago and surpassed the 8.8% Dow Jones estimate. As a result, traders in the futures market expect the Federal Reserve to raise interest rates by one percentage point at its July 26-27 meeting. Also, Bank of America Global Research, led by Savita Subramanian, cut its year-end price target on the benchmark S&P 500 to 3,600 from 4,500.
Given the current market scenario, we think fundamentally sound REITs Alliance Global Group, Inc. (ALGGY), Crown Castle International Corp. (CCI), and Brookfield Property Partners L.P. (BPY) could be ideal investments for the second half of the year.
Alliance Global Group, Inc. (ALGGY)
Headquartered in Quezon City, the Philippines, ALGGY is engaged in real estate development, tourism entertainment and gaming, food and beverage, quick-service restaurant, and infrastructure development businesses in the Philippines and internationally. The company operates through Megaworld, Emperador, Travellers, and GADC segments.
ALGGY's revenue and income increased 17.9% year-over-year to ₱37.50 billion ($664.98 million) for the first quarter ended March 31, 2022. The net profit grew 66.9% from its year-ago value to ₱5.35 billion ($94.87 million), while its EPS improved 55% year-over-year to ₱0.42.
Analysts expect ALGGY’s revenue to increase 18.2% year-over-year to $3.22 billion for fiscal 2022.
ALGGY’s POWR Ratings reflect this promising outlook. The company has an overall rating of A, which translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock also has a B grade for Value, Quality, and Stability. Within the C-rated REITs - Diversified industry, it is ranked #1 of 51 stocks.
To see additional POWR Ratings for Growth, Sentiment, and Momentum for ALGGY, click here.
Crown Castle International Corp. (CCI)
CCI owns, operates, and leases more than 40,000 cell towers and approximately 80,000 route miles of fiber supporting small cells and fiber solutions across every major U.S. market. This nationwide portfolio of communications infrastructure connects cities and communities to essential data, technology, and wireless service - bringing information, ideas, and innovations to the people and businesses that need them.
For the first quarter of 2022, CCI’s site rental revenues increased 15% year-over-year to $1.58 billion. The company’s income from continuing operations grew 248% from its year-ago value to $421.00 million, while its EPS improved 246% from its prior-year quarter to $0.97.
Analysts expect CCI’s revenue to increase 8.1% year-over-year to $1.71 billion for the second quarter ending June 2022. The consensus EPS estimate of $1.91 represents a 12.8% improvement year-over-year for the second quarter ending June 2022. Moreover, it has an impressive earnings surprise history, as it surpassed the consensus EPS estimates in all of the trailing four quarters.
The stock has gained 8.3% over the past month.
CCI's strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The stock also has a B grade for Growth and Stability. Within the REITs - Diversified industry, it is ranked #12.
In total, we rate CCI on eight different levels. Beyond what we've stated above, we have also given CCI grades for Value, Quality, Sentiment, and Momentum for CCI. Click here to see the additional ratings.
Brookfield Property Partners L.P. (BPY)
BPY is one of the world's leading real estate companies, with approximately $88 billion in total assets. The company owns and operates iconic properties in the world's major markets, and our global portfolio includes office, retail, multifamily, logistics, hospitality, self-storage, triple net lease, manufactured housing, and student housing.
In the first quarter ending March 31, 2022, BPY's total revenue increased 41.7% year-over-year to $2.05 billion. Its net income amounted to $1.69 billion, up 131.5% from its year-ago value. The company's cash and cash equivalent stood at $1.91 billion for three months ending March 31, 2022.
BPY's strong fundamentals are reflected in its POWR Ratings. The stock has a B grade for Momentum. Within the same industry, it is ranked #8.
In total, we rate BPY on eight different levels. Beyond what we've stated above, we have also given BPY grades for Value, Sentiment, Growth, Quality, and Stability. Get all the BPY ratings here.
ALGGY shares were trading at $8.81 per share on Friday afternoon, up $0.21 (+2.38%). Year-to-date, ALGGY has declined -24.96%, versus a -18.55% rise in the benchmark S&P 500 index during the same period.
About the Author: Spandan Khandelwal
Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing.
3 REITs to Pay Close Attention to the Second Half of 2022 StockNews.com
