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4 REITs Boosting Investor Hopes in Q4 Earnings Amid Pandemic Blues
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The current reporting cycle for REITs is in full swing and while it began in January, several of these companies are yet to release their quarterly numbers, which is usually a distinctive feature of the fourth quarter.
Obviously, investors are busy crunching profit numbers and surprises of REITs that have already reported their fourth-quarter figures so far. However, instead of accumulating stocks later, investing in the ones that are yet to report earnings and are poised for a beat can be far more rewarding. This is because an earnings beat essentially serves as a catalyst, boosts investor confidence in a stock and triggers further price appreciation.
The coronavirus mayhem continued wreaking havoc even during the October-December period. Nonetheless, with REITs investing in all types of properties, from residential, industrial, offices, malls to hospitals, hotels and data centers and several others, not all have suffered setbacks. This is because, though the choppiness prevailed in a number of property types, including apartment, retail and hotels, there have been gainers too, like e-commerce and cloud business, which are gaining from the heightening reliance on technology thanks to the remote working wave due to the social-distancing mandates.
The stay-at-home economy with robust reliance on technology acted as a catalyst amid the pandemic for data centers and tower REITs, which play a vital role in providing the critical infrastructures needed for a seamless connection. These REITs too are likely to have witnessed solid demand and leasing activities during the December-end quarter.
Also, given the higher investments in pharmaceutical research and development, critical monetary support from the government and urgent hiring by tenants, lab-office assets are anticipated to have been in high demand during the fourth quarter. Apart from this, increasing levels of patient traffic and activity are likely to have buoyed the performance of medical office buildings.
Additionally, the self-storage industry continues to benefit from favorable demographic changes. Specifically, migration and downsizing trends, and increase in the number of people renting homes have spurred the needs of consumers to rent spaces at storage facilities for parking their possessions. Further, demand for self-storage spaces has shot up amid the flexible working environment as well as improving housing market, while move-outs remain low amid the health crisis, resulting in improved year-over-year occupancy trends, increased average length of stay, higher rental rates charged to new tenants, as well as resumption of rate hikes to existing long-term tenants although at a lesser magnitude than in the previous years.
Apart from the underlying asset categories, location of properties plays a key role in determining their performance. Therefore, delving into the asset fundamentals and markets of each REIT becomes all the more important, before picking up stocks for investments.
The Zacks Methodology
However, picking the right stock could be difficult unless one knows the proper method. To make the task simple, we rely on the Zacks methodology, combining a Zacks Rank — Zacks Rank #1 (Strong Buy) or 2 (Buy) or 3 (Hold) — and a positive Earnings ESP.
Our proprietary methodology, Earnings ESP, shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. And research shows that for stocks with this combination of rank and ESP, chances of a positive earnings surprise are as high as 70%.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here are four REITs that have the right combination of elements to deliver positive surprises this season. Also, the low-rate environment and the diversification benefits that real estates offer make them prudent investment choices now.
American Tower Corporation (AMT - Free Report) currently carries a Zacks Rank of 3 and has an Earnings ESP of +7.49%. This tower REIT has a decent surprise history, having beaten estimates in all of the preceding four quarters, the average surprise being 3.69%.
Amid the roll-out of the latest technologies and significant growth in the overall network utilization, carriers continue to spend capital to boost coverage and capacity in American Tower markets. Moreover, remote working and online purchases amid the pandemic are likely to have spurred the demand for cellular data. This has acted as a catalyst for tower REITs that play a pivotal role in providing critical infrastructures needed for a seamless connection. These narratives point toward a healthy domestic leasing environment during the fourth quarter for the company. Also, American Tower is likely to have reaped benefits from its efforts to extend the platform in a number of international locations.
American Tower Corp. is slated to report October-December quarterly figures on Feb 25.
Life Storage, Inc. carries a Zacks Rank of 2 and has an Earnings ESP of +0.43% for the to-be-reported quarter, at present.
The company acquires and manages self-storage properties throughout the United States and operates under the brand name Life Storage. The REIT serves both residential and commercial storage customers, with storage units rented by month, providing responsive service to roughly 500,000 customers. It is poised to benefit from the robust fundamentals of the self-storage market.
Life Storage is set to release earnings results on Feb 22.
Healthcare Trust of America, Inc. currently carries a Zacks Rank of 3 and has an Earnings ESP of +1.84% for the quarter under review.
Healthcare Trust of America is the largest dedicated owner and operator of medical office buildings (MOBs) in the United States. The company invests in medical office buildings that are core-critical, focusing on properties that are on campuses of hospitals, in community-core locations, and on campuses of universities, leading academic medical centers and teaching hospitals. In its fourth-quarter update, the company announced the acquisition of more than $129 million of medical office investments and collection of more than 99% of contractual rent due in the period. The REIT’s solid acquisition momentum reflects the support from long-term relationships in its key markets.
Healthcare Trust of America is scheduled to announce fourth-quarter figures on Feb 22.
Healthcare Trust of America, Inc. Price and EPS Surprise
National Storage Affiliates Trust (NSA - Free Report) holds a Zacks Rank #3 and has an Earnings ESP of +4.30%, at present. The company surpassed estimates in each of the preceding four quarters, the average surprise being 5.08%.
National Storage Affiliates is focused on ownership, operation and acquisition of self-storage facilities situated within the top 100 metropolitan statistical areas throughout the United States and is poised to gain from the healthy fundamentals of its asset category.
National Storage Affiliates will report October-December quarterly figures on Feb 22.
National Storage Affiliates Trust Price and EPS Surprise
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by referendums and legislation, this industry is expected to blast from an already robust $17.7 billion in 2019 to a staggering $73.6 billion by 2027. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Image: Bigstock
4 REITs Boosting Investor Hopes in Q4 Earnings Amid Pandemic Blues
The current reporting cycle for REITs is in full swing and while it began in January, several of these companies are yet to release their quarterly numbers, which is usually a distinctive feature of the fourth quarter.
Obviously, investors are busy crunching profit numbers and surprises of REITs that have already reported their fourth-quarter figures so far. However, instead of accumulating stocks later, investing in the ones that are yet to report earnings and are poised for a beat can be far more rewarding. This is because an earnings beat essentially serves as a catalyst, boosts investor confidence in a stock and triggers further price appreciation.
The coronavirus mayhem continued wreaking havoc even during the October-December period. Nonetheless, with REITs investing in all types of properties, from residential, industrial, offices, malls to hospitals, hotels and data centers and several others, not all have suffered setbacks. This is because, though the choppiness prevailed in a number of property types, including apartment, retail and hotels, there have been gainers too, like e-commerce and cloud business, which are gaining from the heightening reliance on technology thanks to the remote working wave due to the social-distancing mandates.
The stay-at-home economy with robust reliance on technology acted as a catalyst amid the pandemic for data centers and tower REITs, which play a vital role in providing the critical infrastructures needed for a seamless connection. These REITs too are likely to have witnessed solid demand and leasing activities during the December-end quarter.
Also, given the higher investments in pharmaceutical research and development, critical monetary support from the government and urgent hiring by tenants, lab-office assets are anticipated to have been in high demand during the fourth quarter. Apart from this, increasing levels of patient traffic and activity are likely to have buoyed the performance of medical office buildings.
Additionally, the self-storage industry continues to benefit from favorable demographic changes. Specifically, migration and downsizing trends, and increase in the number of people renting homes have spurred the needs of consumers to rent spaces at storage facilities for parking their possessions. Further, demand for self-storage spaces has shot up amid the flexible working environment as well as improving housing market, while move-outs remain low amid the health crisis, resulting in improved year-over-year occupancy trends, increased average length of stay, higher rental rates charged to new tenants, as well as resumption of rate hikes to existing long-term tenants although at a lesser magnitude than in the previous years.
Apart from the underlying asset categories, location of properties plays a key role in determining their performance. Therefore, delving into the asset fundamentals and markets of each REIT becomes all the more important, before picking up stocks for investments.
The Zacks Methodology
However, picking the right stock could be difficult unless one knows the proper method. To make the task simple, we rely on the Zacks methodology, combining a Zacks Rank — Zacks Rank #1 (Strong Buy) or 2 (Buy) or 3 (Hold) — and a positive Earnings ESP.
Our proprietary methodology, Earnings ESP, shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. And research shows that for stocks with this combination of rank and ESP, chances of a positive earnings surprise are as high as 70%.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here are four REITs that have the right combination of elements to deliver positive surprises this season. Also, the low-rate environment and the diversification benefits that real estates offer make them prudent investment choices now.
American Tower Corporation (AMT - Free Report) currently carries a Zacks Rank of 3 and has an Earnings ESP of +7.49%. This tower REIT has a decent surprise history, having beaten estimates in all of the preceding four quarters, the average surprise being 3.69%.
Amid the roll-out of the latest technologies and significant growth in the overall network utilization, carriers continue to spend capital to boost coverage and capacity in American Tower markets. Moreover, remote working and online purchases amid the pandemic are likely to have spurred the demand for cellular data. This has acted as a catalyst for tower REITs that play a pivotal role in providing critical infrastructures needed for a seamless connection. These narratives point toward a healthy domestic leasing environment during the fourth quarter for the company. Also, American Tower is likely to have reaped benefits from its efforts to extend the platform in a number of international locations.
American Tower Corp. is slated to report October-December quarterly figures on Feb 25.
American Tower Corporation Price and EPS Surprise
American Tower Corporation price-eps-surprise | American Tower Corporation Quote
Life Storage, Inc. carries a Zacks Rank of 2 and has an Earnings ESP of +0.43% for the to-be-reported quarter, at present.
The company acquires and manages self-storage properties throughout the United States and operates under the brand name Life Storage. The REIT serves both residential and commercial storage customers, with storage units rented by month, providing responsive service to roughly 500,000 customers. It is poised to benefit from the robust fundamentals of the self-storage market.
Life Storage is set to release earnings results on Feb 22.
Life Storage, Inc. Price and EPS Surprise
Life Storage, Inc. price-eps-surprise | Life Storage, Inc. Quote
You can see the complete list of today’s Zacks #1 Rank stocks here.
Healthcare Trust of America, Inc. currently carries a Zacks Rank of 3 and has an Earnings ESP of +1.84% for the quarter under review.
Healthcare Trust of America is the largest dedicated owner and operator of medical office buildings (MOBs) in the United States. The company invests in medical office buildings that are core-critical, focusing on properties that are on campuses of hospitals, in community-core locations, and on campuses of universities, leading academic medical centers and teaching hospitals. In its fourth-quarter update, the company announced the acquisition of more than $129 million of medical office investments and collection of more than 99% of contractual rent due in the period. The REIT’s solid acquisition momentum reflects the support from long-term relationships in its key markets.
Healthcare Trust of America is scheduled to announce fourth-quarter figures on Feb 22.
Healthcare Trust of America, Inc. Price and EPS Surprise
Healthcare Trust of America, Inc. price-eps-surprise | Healthcare Trust of America, Inc. Quote
National Storage Affiliates Trust (NSA - Free Report) holds a Zacks Rank #3 and has an Earnings ESP of +4.30%, at present. The company surpassed estimates in each of the preceding four quarters, the average surprise being 5.08%.
National Storage Affiliates is focused on ownership, operation and acquisition of self-storage facilities situated within the top 100 metropolitan statistical areas throughout the United States and is poised to gain from the healthy fundamentals of its asset category.
National Storage Affiliates will report October-December quarterly figures on Feb 22.
National Storage Affiliates Trust Price and EPS Surprise
National Storage Affiliates Trust price-eps-surprise | National Storage Affiliates Trust Quote
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by referendums and legislation, this industry is expected to blast from an already robust $17.7 billion in 2019 to a staggering $73.6 billion by 2027. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot stocks we're targeting >>