10 Best Residential Real Estate Stocks to Buy

5. Invitation Homes Inc. (NYSE:INVH)

Number of Hedge Fund Holders: 28

Value of Hedge Fund Holdings: $618,348,000

Invitation Homes Inc. (NYSE:INVH) is a single-family home leasing and management company based in the United States. The company specializes in providing top-notch residential properties that are in convenient proximity to offices, education centers, and transport channels.

The company owns and manages more than 80,000 homes across 16 top American markets. The houses are located in desirable neighborhoods and are integrated with Smart Home Tech to increase client satisfaction. This approach has allowed Invitation Homes Inc. (NYSE:INVH) to achieve an 80% resident retention rate.

In Q1 2024, Invitation Homes Inc. (NYSE:INVH) reported a diluted earnings per share of $0.23. This reflected a YoY increase of 15%. Meanwhile, the company’s revenue was recorded at $646.04 million, up from $624.32 million in Q4, 2023.

Analysts have given Invitation Homes Inc. (NYSE:INVH) an average rating of “Moderate Buy.” Among the analysts, 7 recommend holding the stock, while 6 suggest buying it. The average target price is $37.83, with estimates ranging from a low of $36 to a high of $40.

This new average target price represents an over 7% increase from the current price of $35.31, indicating a generally bullish outlook on Invitation Homes Inc. (NYSE:INVH) stock.

Here’s what Baron Funds said about Invitation Homes Inc. (NYSE:INVH) in its Q3 2023 investor letter:

“Following strong second quarter results, we modestly increased our investments in single-family rental REITs Invitation Homes, Inc. (NYSE:INVH). Demand conditions for rental homes are attractive due to the sharp decline in home affordability; the propensity to rent in order to avoid mortgage down payments, avoid higher monthly mortgage costs, and maintain flexibility; and the stronger demand for home rentals in suburbs rather than apartment rentals in cities. Rising construction costs are limiting the supply of single-family rental homes in the U.S. housing market. This limited inventory combined with strong demand is leading to robust rent growth.

Invitation Homes have an opportunity to partially offset the impact of inflation given that their in-place annual leases are significantly below market rents. Valuations are compelling at mid-5% capitalization rates, and we believe the shares are currently valued at a discount to our assessment of net asset value. We remain mindful that expense headwinds and slower top-line growth could weigh on growth later in 2023 and 2024. We will continue to closely monitor business developments and will adjust our exposures accordingly.”