At a minuscule nine times forward earnings, and valued at just 73% of book value, I see no reason why Teck shouldn’t be on your radar.
A smart investment
Short-sellers have been out in full force this month in Kimco Realty Corp (NYSE:KIM), a real estate investment trust that has owned interests in 895 shopping centers across North, Central, and South America. The selling has been particularly noticeable ever since Kimco Realty Corp (NYSE:KIM) announced it was purchasing a partner’s stake in 70 shopping centers via two portfolios — the Kimco Realty Corp (NYSE:KIM) Income Fund I and Kimco Realty Corp (NYSE:KIM) Income REIT joint venture – for $67 million. Investors may not be thrilled with this purchase, but I’m certainly not doing any complaining.
The 70 shopping centers that Kimco Realty Corp (NYSE:KIM) acquired currently boast a 96% occupancy rate, and are home to some of the biggest and healthiest retailers in the U.S., including Wal-Mart Stores, Inc. (NYSE:WMT) and The Home Depot, Inc. (NYSE:HD). The best aspect of having a company like Wal-Mart Stores, Inc. (NYSE:WMT) as a renter is that it has more than sufficient cash flow to deal with inflation-pacing rent hikes, and its business is non-cyclical, thanks to its wide variety of products carried. This means a portfolio full of investment-grade renters for Kimco Realty Corp (NYSE:KIM).
I believe we’re also seeing overblown fears that a rise in interest rates could harm the want for REIT’s like Kimco, which pay out a minimum of 90% of their overall income as a dividend. Kimco’s 3.8% yield certainly isn’t as high as you’ll find from other REIT stocks (think mortgage-REIT’s for instance), but it’s still nearly double what you’d make investing in a 10-year U.S. Treasury bond.
Kimco’s portfolio is sporting high occupancy rates which give it plenty of rental pricing power, and its yield of 3.8% appears safer by the day. This is a REIT that should be heading higher.
Foolish roundup
This week, it’s all about going back to basics. The thing that matters most for telecom service providers and mineral miners is cash flow, and Telecom Italia and Teck Resources have more than ample cash flow to maintain their dividends and support higher valuations. For Kimco, it’s all about occupancy rates and the quality of its occupants, which doesn’t appear to be a problem.
I’m so confident that these three names will bounce off their lows that I’m going to make a CAPScall of outperform on each one.
The article 3 Stocks Near 52-Week Lows Worth Buying originally appeared on Fool.com is written by Sean Williams.
Fool contributor Sean Williams owns shares of France Telecom, but has no material interest in any other companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. The Motley Fool owns shares of, and recommends, France Telecom. It also recommends Home Depot.
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