In this article, we shall discuss the top 5 REIT stocks under $10. To read our detailed analysis of the real estate sector in 2022, go directly and see Top 10 REIT Stocks Under $10.
5. AGNC Investment Corp. (NASDAQ:AGNC)
Number of Hedge Fund Holdings: 18
Share Price (As of September 27): $9.08
Based in Bethesda, Maryland, AGNC Investment (NASDAQ:AGNC) is an internally-managed real estate investment trust. They invest predominantly in agency residential mortgage-backed securities on a leveraged basis, financed primarily through collateralized borrowings structured as repurchased agreements. AGNC Investment (NASDAQ:AGNC) posted an EPS of $0.83 in Q2 2022, beating estimates of $0.59 by $0.24.
On August 8, Keefe Bruyette analyst Bose George upgraded AGNC Investment (NASDAQ:AGNC) to Outperform from Market Perform, conferring a price target of $13.25.
Investor interest around AGNC Investment (NASDAQ:AGNC) has skyrocketed in the second quarter of 2022, with 18 hedge funds long the stock, compared to 14 in the preceding quarter. Ken Griffin’s Citadel Investment Group is the largest shareholder in the stock, having a total stake value of $51.48 million.
4. Hudson Pacific Properties Inc. (NYSE:HPP)
Number of Hedge Fund Holdings: 20
Share Price (As of September 27): $9.83
Headquartered in Los Angeles, California, Hudson Pacific Properties Inc. (NYSE:HPP) is a real estate investment trust with an extensive portfolio and large investments in offices, sound stages, and other commercial property. Hedge fund sentiment around Hudson Pacific Properties Inc. (NYSE:HPP) grew more favorable in Q2 2022, with 20 hedge funds long the stock, compared to 14 hedge funds in Q1 2022. Balyasny Asset Management is the largest shareholder in the stock in Q2 2022, owning more than 2.51 million shares worth $37.19 million. Moreover, the company reported an annual dividend yield of 9.11% as of September 30.
On September 9, Morgan Stanley analyst Ronald Kamdem upgraded Hudson Pacific shares (NYSE:HPP) to Equal Weight from Under Weight, conferring a price target of $13 on the shares. The analyst ascertained that with shares down by more than 50% TTM in Q2 2022, the risk/reward ratio is perfectly balanced. Furthermore, Hudson Pacific Properties (NYSE:HPP) has an extensive portfolio of offices and shared working spaces which are currently occupied by some of the largest publicly traded technology and media companies in the world. For investors looking for an entry point into the tech or media sector, investing in the Hudson Pacific (NYSE:HPP) stock could be the perfect opportunity, as the company’s shares are one of the cheapest in the real estate industry, currently trading at $9.83 per share as of September 27.
3. RLJ Lodging Trust Inc. (NYSE:RLJ)
Number of Hedge Fund Holdings: 22
Share Price (As of September 27): $10.0
Based in Maryland, RLJ Lodging Trust (NYSE:RLJ) is a hotel investment company that owns premium-branded, rooms-oriented, high-margin, focused-service and compact full-service hotels. The company owns over 96 hotels with approximately 21,200 rooms spread out over 23 states. As of the second quarter of 2022, RLJ Lodging Trust (NYSE:RLJ) posted an EPS of $0.16, beating estimates of $0.1 by $0.06. The company also reported a revenue of $330.5 million in Q2 2022.
On August 7, Barclays analyst Anthony Powell lowered the price target on RLJ Lodging Trust (NYSE:RLJ) to $15 from $18, keeping an Equal Weight rating on the shares. According to Powell, lodging REITs have already been priced in a typical downturn, which presents an excellent buying opportunity. The analyst admits that although a financial slump is possible due to the challenging macroeconomic climate, the company’s pent up convention demand sheds doubts on the likelihood on the slump. Shares of RLJ Lodging Trust (NYSE:RLJ) have consistently generated a yield in excess of 7% in Q2 2022. These shares are perpetual, convertible, and not callable. As of the second quarter of 2022, Ken Griffin’s Citadel Investment Group is the largest shareholder in the stock, owning more than 3.93 million shares worth $43.32 million.
2. DiamondRock Hospitality Co. (NYSE:DRH)
Number of Hedge Fund Holdings: 22
Share Price (As of September 27): $7.35
Based in Maryland, DiamondRock Hospitality (NYSE:DRH) is a real estate investment trust. The company is self-advised and owns more than 33 premium destination resorts and hotels all across the United States. The company was named Global Listed Sector Leader by the Global Real Estate Sustainability Benchmark (GRESB), bagging the top spot in the Hotel Sector two years in a row for its impressive CSR program.
1. The Macerich Co. (NYSE:MAC)
Number of Hedge Fund Holdings: 23
Share Price (As of September 27): $7.73
Based in Santa Monica, California, The Macerich Co. (NYSE:MAC) is the third-largest, self-advised, real estate investment trust in the U.S, and invests primarily in shopping centers. As of September 27, the company has a market cap of $1.73 billion, and a price-to-earnings ratio of 32.2. Investor interest around The Macerich Co. (NYSE:MAC) has increased, with 23 hedge funds having a stake value of $105.57 million in Q2 2022. This is up from 20 hedge funds having a stake of $160.26 million in Q1 2022. AQR Capital Management is the largest shareholder in the company as of Q2 2022.
Macerich’s (NYSE:MAC) portfolio comprises a variety of premium-quality assets at very low valuations, which in turn opens up an excellent opportunity for investors eying the real estate sector. The variation and quality of the company’s portfolio incentivizes investors who can afford the risk. With one of the lowest valuation multiples in the industry, the company is set to accomplish its expansion objectives by 2025. It offers significant current income with a 5.2% dividend yield as of Q2 2022, and substantial potential for price appreciation. With a dividend yield of 5.2% and an increased possibility for share price appreciation, the risk/reward ratio is on the upside.
Here is what Smead Capital Management had to say about The Macerich Co. (NYSE:MAC) in their Q2 2022 investor letter:
“Leading the downside were stocks we own tied to any economic optimism. Warner Bros. Discovery (WBD) suffered selling from AT&T (T) shareholders disposing of it upon distribution of the shares in the merger. We have been too optimistic about how long it would take for these uninterested parties to sell. The Macerich Company (NYSE:MAC) suffered from fears of what a recession and higher interest rates would do to their business, disregarding the recovery in the Class “A” mall space since 2020.”
You can also take a peek at 10 Best Gun Stocks to Invest In and 15 Largest FMCG Companies in the World.
