We recently published a list of 10 Best Real Estate Stocks to Buy According to Billionaires. In this article, we are going to take a look at where American Tower Corporation (NYSE:AMT) stands against other best real estate stocks to buy according to billionaires.
In 2025, CBRE Investment Management sees the potential for global listed real estate to outperform broad equities and offer a differentiated total return as compared to the private markets. As per the firm, the listed real estate remains in the early days of a new upcycle, one where long-term yields remain range-bound, earnings continue to accelerate, listed capital market access remains abundant, and valuations can aid continued returns. In 2025, the listed real estate is expected to be characterized by accelerating organic earnings based on improved supply/demand throughout various sectors and access to capital supporting potential acquisitions and upside to estimates, among others.
Listed Real Estate- What’s Ahead?
CBRE Investment Management believes that a new cycle for listed real estate kicked off in Q4 2023 with the recognition of a pause in the rate hikes. The absence of hikes is expected to be powerful for listed real estate, even though there isn’t a strong fall in target rates themselves. Notably, real estate has performed well during periods of range-bound long-term yields. Over 2001-2007, the US 10-year bonds delivered between ~4% – 5%, and listed real estate managed to generate double-digit average returns. The investment firm also added that strong access to capital of listed real estate, versus more constrained private real estate participants, can be maintained moving forward.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
Improved Earnings Growth Expected in Real Estate Sector
CBRE Investment Management sees earnings accelerating into 2025 across the real estate sectors. Globally, it expects 5% earnings growth, which is around double that of 2024 levels. Broad-based strength remains visible, with private-pay senior housing continuing to capitalize on powerful demographics and data center growth accelerating with generative AI. Also, the cell towers continue to gradually recover from customer churn, and retail and net leases have been performing, thanks to supply/demand and their prevailing capital costs.
The investment firm opines that the total return opportunity for REITs remains compelling. The listed real estate provides a ~4% dividend yield, which remains competitive versus private real estate income. This dividend continues to grow and is based on the conservative payout level. Amidst moderating central bank target rates as well as range-bound long-term yields, the firm believes that listed real estate is expected to prosper.
Our Methodology
We used the Finviz stock screener and Insider Monkey’s exclusive database of billionaire stock holdings to shortlist the companies catering to the broader real estate sector. We also mentioned the hedge fund sentiment around each stock, as of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A wide angled view of a high-rise office building, the windows reflecting a nearby cityscape.
American Tower Corporation (NYSE:AMT)
Number of Billionaire Investors: 16
Number of Hedge Fund Holders: 70
American Tower Corporation (NYSE:AMT) is a real estate investment trust that owns, operates, and develops wireless communications and broadcast towers. Wells Fargo analyst Eric Luebchow upgraded the company’s stock to “Overweight” from “Equal Weight” with a price objective of $230, up from $210. The firm is being optimistic about the tower sector, citing uncertain macroeconomic conditions, and bottoming of billings growth in 2025, together with an acceleration in funds from operations growth as churn headwinds ease. American Tower Corporation (NYSE:AMT)’s strategic pivot towards developed markets and data centers can enhance the long-term growth prospects and enhance earnings quality. Notably, the developed markets provide more stable regulatory environments and economic conditions, which can result in more predictable cash flows.
The expansion into data centers remains in line with the increasing demand for cloud services and digital infrastructure, offering new avenues for growth over and above the traditional tower assets. The diversification can lead to a more resilient business model and elevated valuations from investors looking for a reduced risk profile and exposure to high-growth sectors. Amidst the challenging macroeconomic environment, the demand for connectivity throughout American Tower Corporation (NYSE:AMT)’s global platform continues unabated. The focus on enhancing the quality of earnings via portfolio management, disciplined capital allocation, and balance sheet strength place it well against volatility and uncertainty.
Meridian Funds, managed by ArrowMark Partners, released its Q4 2024 investor letter. Here is what the fund said:
“American Tower Corporation (NYSE:AMT) is a leading global owner and operator of wireless communications infrastructure, with a portfolio spanning the U.S. and key international markets. We hold American Tower for its exposure to the secular growth in wireless data consumption and its strategic positioning in underpenetrated emerging markets. The company benefits from long-term contracts with investment-grade wireless carriers, providing strong visibility into future cash flows. This quarter, performance was mixed. Revenue met expectations but fell short of consensus. Adjusted EBITDA declined slightly year-over year, impacted by the divestiture of its India business and elevated bad debt expense. However, organic tenant billings growth remained healthy, with U.S. and international markets posting solid growth. While we maintain conviction in American Tower’s ability to benefit from increasing data consumption and 5G network deployments, near-term currency headwinds and regional challenges warrant monitoring.”
Overall, AMT ranks 1st on our list of best real estate stocks to buy according to billionaires. While we acknowledge the potential of AMT as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than AMT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
