AvalonBay Communities (NYSE:AVB) — This real estate investment trust specializes in upscale apartment communities. An improving U.S. economy with high apartment occupancy levels should result in higher rental rates for AVB, and new development activities will be an important driver of earnings in 2012. FFO per share forecast in 2012 has been adjusted upward to $5.40 vs. $4.57 in 2011 since it was highlighted in our April Top Stocks to Buy. AVB has a dividend yield of 2.64%, which is expected to increase.
On March 30, the stock broke from a multiple top with a trading objective of $150 and made it to over $149 before profit-taking and a broad market selloff drove it down. Both longer-term investors and traders should consider AVB as a buy if it falls to $135. Our longer-term target remains at $175.