We recently compiled a list of the 8 High Growth Real Estate Stocks That Are Profitable in 2024. In this article, we are going to take a look at where VICI Properties Inc. (NYSE:VICI) stands against the other high growth real estate stocks.
Real Estate Sector at a Glance: Recent Updates
In the week ended October 4, the average contract rate on a 30-year fixed-rate mortgage rose 22 basis points as stated by the Mortgage Bankers Association which marks the highest weekly increase in more than a year. As the 30-year fixed rate hit 6.36%, applications to refinance a home loan dropped 9% for the week while applications for a mortgage to purchase a home were reported to be flat, declining by 0.1% from the prior week. Relative to 1 year ago, refinance applications were up 159% and purchase applications were up 8%.
With the Fed cutting rates, many homebuyers who were on the sidelines for long are returning to the market with a rise in homebuying demand and purchase applications. Glenn Kelman, Redfin CEO, believes the Fed rate cut was late for the current season to have a major impact but would help many homebuyers in 2025. He told CNBC that only 2.5% of American homes changed hands within the last 12 months which indicates so many being locked into low mortgage rates. Thus, the market is still struggling with low inventory which is exactly going to be the gating factor for home sales in 2025. While the market looks forward to further rate cuts, Kelman thinks of inventory as a major long-term problem that remains unaddressed.
Another factor currently impacting US real estate is natural disasters such as hurricanes hitting Florida. In an interview with CNBC, Eddie Shapiro, Nest Seekers International president and CEO, discussed the state of the housing market in this regard. In his opinion, Florida is a rather strong and resilient market and hence the rebuilding and recovery would be quicker. Even with one rate cut, he views the momentum to be positive across the market. While the firm recorded its greatest August and September in a really long time, the overall market is entering a sweet spot for mortgage rates which are now in the 6% range.
Our Methodology:
In order to compile a list of the 8 high-growth real estate stocks that are profitable in 2024, we created an initial list of 30 companies with the biggest market caps in the sector. Moving on, we screened out those that had a positive net income in the last twelve months and a positive 5-year net income CAGR. Additionally, these companies were deemed high growth since they had their 5-year net revenue CAGR higher than 10%. Finally, we ranked the shortlisted companies in ascending order of their hedge funds, as of Q2 2024.
At Insider Monkey we are obsessed with 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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A business executive in a sharp suit shaking hands on a real estate deal.
VICI Properties Inc. (NYSE:VICI)
5-Year Net Income Growth: 35.58%
5-Year Revenue Growth: 33.19%
TTM Net Income: $2.64 Billion
Number of Hedge Fund Holders: 33
VICI Properties Inc. (NYSE:VICI) is an experiential real estate investment trust. The firm owns one of the largest portfolios of market-leading gaming, hospitality, and entertainment destinations in the US. This portfolio includes 93 experiential assets across a diverse portfolio comprising 54 gaming properties and 39 other experiential properties across the US and Canada. The company’s strategy involves partnering with quality experiential place makers and operators to create the highest quality experiential real estate portfolio.
VICI is one of the largest triple net lease REITs with $3.1 billion of annualized cash rent. Since the gaming regulatory environment creates high barriers to entry, the firm benefits from a 100% occupancy rate as tenant’s ability to move locations is limited. The firm has also demonstrated growth by announcing approximately $37 billion of domestic and international investments across gaming and other experiential assets since its founding in 2017. VICI also remains diversified with multiple revenue streams i.e. hotel rooms, meeting and convention space, gaming space, entertainment venues, and retail outlets.
For the second quarter, the firm’s total revenues rose 6.6% year-over-year to $957.0 million. AFFO attributable to common stockholders climbed 9.6% year-over-year. Net income attributable to common stockholders increased 7.3% as compared to the prior-year period. Furthermore, VICI committed up to $950 million of capital into existing high-quality partnerships.
VICI Properties Inc. (NYSE:VICI) is a world-leading gaming and experiential REIT with a significant scale and a track record of growth. The firm sets it apart from traditional net lease REITs with assets having high barriers to entry and high financial transparency.
Overall VICI ranks 3rd on our list of the high growth real estate stocks that are profitable in 2024. While we acknowledge the potential of VICI 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 timeframe. If you are looking for a deeply undervalued AI stock that is more promising than VICI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.