12 Most Undervalued REIT Stocks To Buy According To Analysts

Published on March 7, 2024 at 6:27 am by Hamna Asim in Hedge Funds, News

In this article, we discuss 12 most undervalued REIT stocks to buy. If you want to skip our discussion on the REIT industry, head over to 5 Most Undervalued REIT Stocks To Buy According To Analysts.

In 2023, REITs faced a challenging landscape marked by the persistent impact of rising borrowing costs, which continued to be the primary factor influencing the sector for the second consecutive year. The high interest rates and limited access to capital contributed to a subdued performance as the overall volume of real estate purchases and sales remained low last year. Negative headlines surrounding vacant downtown office spaces, a consequence of the widespread shift to remote work, further weighed on investor sentiment, collectively contributing to a sideways trajectory for REITs throughout the year. However, despite these challenges, several REITs demonstrated resilience, reporting robust fundamentals driven by an uptick in rental income. The supply-and-demand dynamics in commercial real estate generally favored the market in 2023, with REITs maintaining well-positioned balance sheets to weather the prevailing market conditions.

Looking forward, Fidelity Investments has a cautiously optimistic outlook for the REIT sector in 2024, contingent upon a stabilization of interest rates and a gradual normalization of commercial real estate transaction volumes. Fidelity’s interest in shopping centers stems from a nuanced analysis of consumer behavior. While malls, traditionally associated with discretionary spending on luxury items, face headwinds during economic uncertainty, shopping centers have emerged as compelling investment opportunities. These centers cater to essential needs such as grocery shopping and prescription filling, making them more resilient during economic downturns. The trend is further supported by budget-conscious consumers turning to shopping centers amidst weakening household credit quality under high-interest rates. Additionally, the changing lifestyle patterns associated with remote and hybrid work have positioned shopping centers, often located closer to residential areas, as beneficiaries of evolving consumer preferences.

Another sub-sector identified by Fidelity that offers promising long-term growth potential is data centers, driven by the increasing demand from cloud providers to meet massive storage needs. Healthcare real estate, particularly senior housing, is identified as another theme with potential for sustained growth. The aging population in the US and other developed nations is expected to fuel demand for quality assisted living and memory-care facilities. Furthermore, the nationwide shortage of affordable housing has created opportunities in the lower-cost manufactured-housing market. This includes RV resorts and mobile-home communities, particularly those targeting retirees. The business models in this sector offer favorable economics, as the owner/operator primarily owns the land, collects rent, and requires minimal additional investment.

Amidst economic uncertainty since 2022, REIT share prices faced a challenging environment, experiencing a 21.4% decline by December 1, 2023, triggered by a notable increase in the 10-year Treasury yield and REIT implied cap rates. However, there are promising signs for a REIT recovery in 2024, according to a recent report by Nareit. Historically, REITs have demonstrated robust total return performances post-monetary policy tightening cycles, and the expected convergence of valuations between REITs and private real estate in 2024 is likely to attract investors. The solid balance sheets of REITs position them well to navigate ongoing economic uncertainty, offering advantages for acquisitions and growth. The valuation divergence, particularly in capitalization rates, is anticipated to narrow in 2024, making REITs an appealing option for investors compared to private real estate.

On the other hand, Fitch Ratings has a deteriorating outlook for the U.S. equity REITs in 2024 due to widespread market hesitation amid persistent inflation and global uncertainties. Higher borrowing rates, coupled with a slowdown in property market activities, have led to discounted prices for investment-grade REITs, creating opportunities for well-capitalized companies with low leverage and ample liquidity to acquire premium properties. The challenging environment is driven by a combination of factors, including banking sector turmoil in the first half of 2023 and the tightening of lending activities.

Investors looking to explore the REIT sector can pick up the most undervalued stocks like VICI Properties Inc. (NYSE:VICI), Essential Properties Realty Trust, Inc. (NYSE:EPRT), and Urban Edge Properties (NYSE:UE).

Our Methodology

For this article, we used a stock screener and shortlisted the most undervalued stocks in the REIT sector by their PE ratios, which were under 20. The most undervalued stocks according to analysts were chosen by considering their upside potential, relying on analyst price targets as of March 5. The price targets were taken from Yahoo Finance. We have also assessed the hedge fund sentiment from Insider Monkey’s database of 933 elite hedge funds tracked as of the end of the fourth quarter of 2023. The list is arranged in ascending order of the number of hedge fund holders in each firm. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here).

View of a mall entrance, showcasing the retail experiences offered by the company’s REIT.

Most Undervalued REIT Stocks To Buy According To Analysts

12. AFC Gamma, Inc. (NASDAQ:AFCG)

Number of Hedge Fund Holders: 3

Average Upside Potential: 28.23%

PE Ratio as of March 5: 7.24

Average Analyst Price Target: $14.67

AFC Gamma, Inc. (NASDAQ:AFCG) specializes in originating, structuring, underwriting, and investing in senior secured loans and other debt securities for established businesses in the cannabis industry. The company focuses on states where medical and/or adult-use cannabis is legalized. AFC Gamma, Inc. (NASDAQ:AFCG) has chosen to be taxed as a real estate investment trust (REIT) for U.S. federal income tax purposes. It is one of the most undervalued stocks to monitor.

On February 22, AFC Gamma, Inc. (NASDAQ:AFCG) announced that it plans to spin off its commercial real estate portfolio into a new publicly traded company, Sunrise Realty Trust, Inc., intending to achieve REIT status. The spin-off will create two distinct entities – one focusing on the cannabis industry and the other on commercial real estate in the southern United States. AFC Gamma, Inc. (NASDAQ:AFCG) shareholders will receive a pro-rata distribution of Sunrise Realty Trust’s common stock and a special cash dividend of $0.15 per common share, with the separation set for completion in mid-2024.

According to Insider Monkey’s fourth quarter database, 3 hedge funds were bullish on AFC Gamma, Inc. (NASDAQ:AFCG), compared to 7 funds in the prior quarter. John Overdeck and David Siegel’s Two Sigma Advisors is the largest stakeholder of the company, with 46,700 shares worth $561,801.

Like VICI Properties Inc. (NYSE:VICI), Essential Properties Realty Trust, Inc. (NYSE:EPRT), and Urban Edge Properties (NYSE:UE), AFC Gamma, Inc. (NASDAQ:AFCG) is one of the best REIT stocks.

11. Ready Capital Corporation (NYSE:RC)

Number of Hedge Fund Holders: 6

Average Upside Potential: 26.8%

PE Ratio as of March 5: 3.83

Average Analyst Price Target: $10.69

Ready Capital Corporation (NYSE:RC) ranks 11th on our list of the most undervalued stocks. It is a real estate finance company operating in the United States. The company engages in the origination, acquisition, financing, and servicing of different types of loans, including small to medium balance commercial loans, small business administration loans, residential mortgage loans, construction loans, and mortgage-backed securities. On February 27, Ready Capital Corporation (NYSE:RC) reported a Q4 non-GAAP EPS of $0.26 and a revenue of $112.55 million, falling short of Wall Street estimates by $0.03 and $137.99 million, respectively.

According to Insider Monkey’s fourth quarter database, 6 hedge funds were bullish on Ready Capital Corporation (NYSE:RC), compared to 9 funds in the prior quarter. Dmitry Balyasny’s Balyasny Asset Management is the largest stakeholder of the company, with 1.32 million shares worth $13.5 million.

10. Innovative Industrial Properties, Inc. (NYSE:IIPR)

Number of Hedge Fund Holders: 11

Average Upside Potential: 20%

PE Ratio as of March 5: 17.07

Average Analyst Price Target: $117.40

Innovative Industrial Properties, Inc. (NYSE:IIPR) specializes in acquiring, owning, and managing properties dedicated to regulated cannabis facilities. The company leases these properties to experienced, state-licensed operators. Innovative Industrial Properties, Inc. (NYSE:IIPR) has opted for real estate investment trust (REIT) taxation. It is one of the most undervalued stocks to invest in. On February 26, Innovative Industrial Properties, Inc. (NYSE:IIPR) reported a Q4 FFO of $2.07 and a revenue of $79.16 million, outperforming Wall Street estimates by $0.05 and $2.68 million, respectively. Revenue for the quarter increased 12.3% year-over-year.

According to Insider Monkey’s fourth quarter database, 11 hedge funds were long Innovative Industrial Properties, Inc. (NYSE:IIPR), compared to 16 funds in the prior quarter. Stuart J. Zimmer’s Zimmer Partners is the largest stakeholder of the company, with 950,628 shares worth nearly $96 million.

9. Hannon Armstrong Sustainable Infrastructure Capital, Inc. (NYSE:HASI)

Number of Hedge Fund Holders: 14

Average Upside Potential: 31.1%

PE Ratio as of March 5: 18.25

Average Analyst Price Target: $33.18

Hannon Armstrong Sustainable Infrastructure Capital, Inc. (NYSE:HASI) is one of the most undervalued stocks in the REIT sector. The company is involved in investing in energy efficiency, renewable energy, and sustainable infrastructure markets within the United States. The company’s diverse portfolio includes equity investments, government and commercial receivables, real estate, and debt securities. On February 15, Hannon Armstrong Sustainable Infrastructure Capital, Inc. (NYSE:HASI) declared a $0.415 per share quarterly dividend, a 5.1% increase from its prior dividend of $0.395. The dividend is to be paid on April 19, to shareholders on record as of April 5.

According to Insider Monkey’s fourth quarter database, 14 hedge funds were bullish on Hannon Armstrong Sustainable Infrastructure Capital, Inc. (NYSE:HASI), compared to 17 funds in the last quarter. Philip Hempleman’s Ardsley Partners is the largest stakeholder of the company, with 781,750 shares worth $21.5 million.

Aristotle Small/Mid Cap Equity Strategy made the following comment about Hannon Armstrong Sustainable Infrastructure Capital, Inc. (NYSE:HASI) in its first quarter 2023 investor letter:

“Hannon Armstrong Sustainable Infrastructure Capital, Inc. (NYSE:HASI), a Maryland-based sustainable asset financing and investing company was added to the portfolio. We believe the company remains uniquely positioned to benefit as the demand for sustainable energy and infrastructure continues to grow. Additionally, we believe the company’s diverse portfolio, emphasis on proven technologies and long-term partnerships will result in less cyclical, lower risk, more predictable cash flows which can drive shareholder value in periods to come.”

8. Kimco Realty Corporation (NYSE:KIM)

Number of Hedge Fund Holders: 17

Average Upside Potential: 18.23%

PE Ratio as of March 5: 19.50

Average Analyst Price Target: $23.28

Kimco Realty Corporation (NYSE:KIM) ranks 8th on our list of the most undervalued stocks. It is a real estate investment trust that operates open-air, grocery-anchored shopping centers in North America. The company also holds a growing portfolio of mixed-use assets. On February 8, Kimco Realty Corporation (NYSE:KIM) declared a $0.24 per share quarterly dividend, in line with previous. The dividend is payable on March 21, to shareholders on record as of March 7.

According to Insider Monkey’s fourth quarter database, 17 hedge funds were bullish on Kimco Realty Corporation (NYSE:KIM), compared to 16 funds in the prior quarter. Ken Griffin’s Citadel Investment Group is the leading stakeholder of the company, with 5.2 million shares worth $111.28 million.

Horizon Kinetics made the following comment about Kimco Realty Corporation (NYSE:KIM) in its Q1 2023 investor letter:

“The return differential between land and the REIT model can be observed at another relatively long-lived company. The inherent economics of a business emerge with the benefit of time, which blurs the noise of quarterly and annual results. One of the oldest publicly traded REITs is Kimco Realty Corporation (NYSE:KIM), which predates even Simon Property Group. 14 Kimco came public near year-end 1991, so it has a 30-plus year operating history. It has an $11 billion stock market value and is one of the 30 companies in the REIT sector of the S&P 500. The REIT sector has an aggregate market cap of $773 billion; this figure will be mentioned again very shortly.

Kimco revenues have risen 10.7% annually since 1991, and flow of funds from operations have compounded at 11.2%. This is very creditable, as far as it goes…”(Click here to read the full text)

7. Arbor Realty Trust, Inc. (NYSE:ABR)

Number of Hedge Fund Holders: 17

Average Upside Potential: 20.3%

PE Ratio as of March 5: 7.46

Average Analyst Price Target: $15.17

Arbor Realty Trust, Inc. (NYSE:ABR) is an investment company focusing on a diversified portfolio of structured finance assets in the multifamily, single-family rental, and commercial real estate markets in the United States. The company qualifies as a real estate investment trust for federal income tax purposes, with a commitment to distributing at least 90% of its taxable income to stockholders. Arbor Realty Trust, Inc. (NYSE:ABR) is one of the most undervalued stocks to invest in.

On February 16, Arbor Realty Trust, Inc. (NYSE:ABR) declared a quarterly dividend of $0.43 per share, in line with previous. The dividend is payable on March 15, to shareholders on record as of March 4. The company also reported a Q4 non-GAAP EPS of $0.54 and a revenue of $103.58 million, exceeding Wall Street estimates by $0.09 and $5.93 million, respectively.

According to Insider Monkey’s fourth quarter database, 17 hedge funds were bullish on Arbor Realty Trust, Inc. (NYSE:ABR), compared to 13 funds in the last quarter. Leon Cooperman’s Omega Advisors is the largest stakeholder of the company, with 2.38 million shares worth over $36 million.

Silver Beech Capital made the following comment about Arbor Realty Trust, Inc. (NYSE:ABR) in its second quarter 2023 investor letter:

“Arbor Realty Trust, Inc. (NYSE:ABR) is a small-capitalization mortgage REIT that primarily originates bridge multifamily and single-family home loans. Arbor also has in-house asset-light agency loan origination and mortgage servicing right segments that are a good strategic fit for properties that mature out of Arbor’s bridge multifamily loan program. Over the last decade, in part due to Arbor’s unique business combination and capital allocation strength, the company has earned among the highest returns on equity and shareholder returns in the mortgage REIT sector.

On March 14, an unidentified short seller published a report that claimed Arbor had engaged in fraud by hiding toxic assets off-balance sheet, reporting fake revenues, and accused management of looting funds from the company, among several similar claims. The report’s claims were among the most extraordinary we have read in a short report and resulted in a dramatic decline in the company’s share price. Additionally, the report was released three days after Silicon Valley Bank was put into foreclosure by the FDIC. Investor fear and the short report drove selling, compounded by a Wall Street Journal article highlighting a multifamily loan to a distressed Houston project…” (Click here to read the full text)

6. Rithm Capital Corp. (NYSE:RITM)

Number of Hedge Fund Holders: 19

Average Upside Potential: 10.95%

PE Ratio as of March 5: 10.04

Average Analyst Price Target: $12.05

Rithm Capital Corp. (NYSE:RITM) operates as an asset manager with a focus on real estate, credit, and financial services. Rithm Capital Corp. (NYSE:RITM) qualifies as a real estate investment trust for federal income tax purposes, making it exempt from federal corporate income taxes if it distributes at least 90% of its taxable income to stockholders. On February 7, Rithm Capital Corp. (NYSE:RITM) reported Q4 earnings that were less of a decline than anticipated. Additionally, the company announced new share repurchase programs for both common and preferred shares, with a total allocation of up to $300 million.

According to Insider Monkey’s fourth quarter database, 19 hedge funds were long Rithm Capital Corp. (NYSE:RITM), compared to 24 funds in the preceding quarter. Israel Englander’s Millennium Management is the biggest stakeholder of the company, with 3.18 million shares worth $34 million.

Like VICI Properties Inc. (NYSE:VICI), Essential Properties Realty Trust, Inc. (NYSE:EPRT), and Urban Edge Properties (NYSE:UE), Rithm Capital Corp. (NYSE:RITM) is one of the most undervalued stocks in the REIT space.

Click to continue reading and see 5 Most Undervalued REIT Stocks To Buy According To Analysts.

AI Fire Sale: Insider Monkey’s #1 AI Stock Pick Is On A Steep Discount

Published on October 30, 2024 at by Inan Dogan, PhD

Artificial intelligence is the greatest investment opportunity of our lifetime. The time to invest in groundbreaking AI is now, and this stock is a steal!

The whispers are turning into roars.

Artificial intelligence isn’t science fiction anymore.

It’s the revolution reshaping every industry on the planet.

From driverless cars to medical breakthroughs, AI is on the cusp of a global explosion, and savvy investors stand to reap the rewards.

Here’s why this is the prime moment to jump on the AI bandwagon:

Exponential Growth on the Horizon: Forget linear growth – AI is poised for a hockey stick trajectory.

Imagine every sector, from healthcare to finance, infused with superhuman intelligence.

We’re talking disease prediction, hyper-personalized marketing, and automated logistics that streamline everything.

This isn’t a maybe – it’s an inevitability.

Early investors will be the ones positioned to ride the wave of this technological tsunami.

Ground Floor Opportunity: Remember the early days of the internet?

Those who saw the potential of tech giants back then are sitting pretty today.

AI is at a similar inflection point.

We’re not talking about established players – we’re talking about nimble startups with groundbreaking ideas and the potential to become the next Google or Amazon.

This is your chance to get in before the rockets take off!

Disruption is the New Name of the Game: Let’s face it, complacency breeds stagnation.

AI is the ultimate disruptor, and it’s shaking the foundations of traditional industries.

The companies that embrace AI will thrive, while the dinosaurs clinging to outdated methods will be left in the dust.

As an investor, you want to be on the side of the winners, and AI is the winning ticket.

The Talent Pool is Overflowing: The world’s brightest minds are flocking to AI.

From computer scientists to mathematicians, the next generation of innovators is pouring its energy into this field.

This influx of talent guarantees a constant stream of groundbreaking ideas and rapid advancements.

By investing in AI, you’re essentially backing the future.

The future is powered by artificial intelligence, and the time to invest is NOW.

Don’t be a spectator in this technological revolution.

Dive into the AI gold rush and watch your portfolio soar alongside the brightest minds of our generation.

This isn’t just about making money – it’s about being part of the future.

So, buckle up and get ready for the ride of your investment life!

Act Now and Unlock a Potential 10,000% Return: This AI Stock is a Diamond in the Rough (But Our Help is Key!)

The AI revolution is upon us, and savvy investors stand to make a fortune.

But with so many choices, how do you find the hidden gem – the company poised for explosive growth?

That’s where our expertise comes in.

We’ve got the answer, but there’s a twist…

Imagine an AI company so groundbreaking, so far ahead of the curve, that even if its stock price quadrupled today, it would still be considered ridiculously cheap.

That’s the potential you’re looking at. This isn’t just about a decent return – we’re talking about a 10,000% gain over the next decade!

Our research team has identified a hidden gem – an AI company with cutting-edge technology, massive potential, and a current stock price that screams opportunity.

This company boasts the most advanced technology in the AI sector, putting them leagues ahead of competitors.

It’s like having a race car on a go-kart track.

They have a strong possibility of cornering entire markets, becoming the undisputed leader in their field.

Here’s the catch (it’s a good one): To uncover this sleeping giant, you’ll need our exclusive intel.

We want to make sure none of our valued readers miss out on this groundbreaking opportunity!

That’s why we’re slashing the price of our Premium Readership Newsletter by a whopping 70%.

For a ridiculously low price of just $29, you can unlock a year’s worth of in-depth investment research and exclusive insights – that’s less than a single restaurant meal!

Here’s why this is a deal you can’t afford to pass up:

• Access to our Detailed Report on this Game-Changing AI Stock: Our in-depth report dives deep into our #1 AI stock’s groundbreaking technology and massive growth potential.

• 11 New Issues of Our Premium Readership Newsletter: You will also receive 11 new issues and at least one new stock pick per month from our monthly newsletter’s portfolio over the next 12 months. These stocks are handpicked by our research director, Dr. Inan Dogan.

• One free upcoming issue of our 70+ page Quarterly Newsletter: A value of $149

• Bonus Reports: Premium access to members-only fund manager video interviews

• Ad-Free Browsing: Enjoy a year of investment research free from distracting banner and pop-up ads, allowing you to focus on uncovering the next big opportunity.

• 30-Day Money-Back Guarantee: If you’re not absolutely satisfied with our service, we’ll provide a full refund within 30 days, no questions asked.

Space is Limited! Only 1000 spots are available for this exclusive offer. Don’t let this chance slip away – subscribe to our Premium Readership Newsletter today and unlock the potential for a life-changing investment.

Here’s what to do next:

1. Head over to our website and subscribe to our Premium Readership Newsletter for just $29.

2. Enjoy a year of ad-free browsing, exclusive access to our in-depth report on the revolutionary AI company, and the upcoming issues of our Premium Readership Newsletter over the next 12 months.

3. Sit back, relax, and know that you’re backed by our ironclad 30-day money-back guarantee.

Don’t miss out on this incredible opportunity! Subscribe now and take control of your AI investment future!

Subscribe Now!

No worries about auto-renewals! Our 30-Day Money-Back Guarantee applies whether you’re joining us for the first time or renewing your subscription a year later!

A New Dawn is Coming to U.S. Stocks

Published on November 16, 2024 at by Insider Monkey Staff

I work for one of the largest independent financial publishers in the world – representing over 1 million people in 148 countries.

We’re independently funding today’s broadcast to address something on the mind of every investor in America right now…

Should I put my money in Artificial Intelligence?

Here to answer that for us… and give away his No. 1 free AI recommendation… is 50-year Wall Street titan, Marc Chaikin.

Marc’s been a trader, stockbroker, and analyst. He was the head of the options department at a major brokerage firm and is a sought-after expert for CNBC, Fox Business, Barron’s, and Yahoo! Finance…

But what Marc’s most known for is his award-winning stock-rating system. Which determines whether a stock could shoot sky-high in the next three to six months… or come crashing down.

That’s why Marc’s work appears in every Bloomberg and Reuters terminal on the planet…

And is still used by hundreds of banks, hedge funds, and brokerages to track the billions of dollars flowing in and out of stocks each day.

He’s used this system to survive nine bear markets… create three new indices for the Nasdaq… and even predict the brutal bear market of 2022, 90 days in advance.

Click to continue reading…

Insider Monkey Ads

Markets

Insider Trading

Hedge Funds

Retirement

Opinion

Log In

Sign Up