Amazon.com, Inc. (AMZN), Google Inc (GOOG): Write a Storybook Ending — Or Lose Your Shirt

DLR Free Cash Flow data by YCharts

DuPont Fabros Technology, Inc. (NYSE:DFT) is sitting in a better cash position, and it has a current ratio of 1.98. Competitor CoreSite Realty Corp (NYSE:COR)’s current ratio is only 0.67 and Digital Realty Trust’s is only 0.73. In the awful case of liquidation — which is far from the current state — you want to own DuPont Fabros Tech. Furthermore, it boasts an extremely low beta, and earnings for the first quarter were up $0.04 from 2012.

The firm exercised a stock repurchase option during the first quarter. It acquired 1,623,673 shares at $23.12 per share. Given that DuPont Fabros Tech is trading just above $24, that leads me to think it is a definite buy.

CoreSite Realty Corp (NYSE:COR) is focused on growth. The firm has increased its dividend payment almost 108% since the company was founded in 2012. Management said they will continue to increase dividends until it reaches the point “required by REIT status and to retain excess cash flow for investment into development opportunities.”

Core Site Realty’s trailing P/E ratio is 112. Its forward P/E is only 14.7. This is further proof of the firm’s strategy. Even with a price decline and higher market risk, its lower forward P/E makes it a much more attractive investment. Expect more earnings per share with this REIT.

Strategy

The massive May sell-off led to under-priced data center REITs. Further, the effects of Amazon and Google’s data centers impacted these firms’ stock price during May.

With the exception of the wake from traders leaving the market, it seems that a big enough pie exists for data center REITs to exist alongside industry mammoths. If you’re looking for income, receiving dividends while we watch this game from the sidelines may be a good play.

Brendan Marasco has no position in any stocks mentioned. The Motley Fool recommends Amazon.com and Google. The Motley Fool owns shares of Amazon.com and Google. Brendan is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article Write a Storybook Ending — Or Lose Your Shirt originally appeared on Fool.com.

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