SPECIAL REPORT The Top 7 Stocks for 2024

The 3 Best REITs to Buy in November


  • Adding REITs to your portfolio could be a smart financial move.
  • Extra Space Storage (EXR): Increasing demand will bring high returns for this stock
  • Prologis (PLD): A $3.1 billion acquisition of industrial properties from Blackstone (BX) in addition to development contracts in Austin and a new business model position Prologis for success.
  • American Tower (AMT): The commitment to sustainability and strengthening communities demonstrate the longevity of the company.
best REITS - The 3 Best REITs to Buy in November

Source: Shutterstock

Positive developments continue to benefit the United States economy. The GDP exhibited a robust growth rate of 4.9% on an annualized basis in the third quarter. In the upcoming earnings season, a period lasting about a month each quarter when companies release financial results, steadily improving economic indicators have led analysts and economists to maintain their high-profit expectations for the quarter. Many experts have even proclaimed the end of the corporate earnings recession in America. That optimism appears to be well-founded. It is also worth noting that this positive economic outlook will have a favorable impact on Real Estate Investment Trust (REIT) stocks. As the overall economic landscape continues to improve, REITs, known for their high-income-producing capabilities, are going to benefit from increased consumer demand. Specifically, these three are the best REITs to purchase in November, as these stocks could lead to enhanced performance in portfolio returns for inventors’ portfolios. 

Extra Space Storage (EXR)

Extra Space Storage (EXR) facility exterior and trademark logo.
Source: Ken Wolter / Shutterstock.com

Extra Space Storage (NYSE:EXR) is a self-storage company in the United States. It has fallen over 28% year-to-date (YTD) as investors become bearish after cooling demand and rising interest rates. Extra Space Storage has done extremely well for itself by buying cheap independent storage facilities and upscaling them. With high interest rates making it harder to acquire land with borrowed money, Extra Space Storage’s acquisition strategy becomes an even bigger competitive advantage. 

The overall market for self-storage is still growing at a CAGR of 5.3% from 2023 to 2028, reaching over $74.8 billion by 2028. The market is driven by factors such as urbanization, population growth and rising disposable income. Many anticipated the U.S. would be in a recession in 2023, but it was offset by strong consumer spending. That trend is likely to continue as wages are finally outpacing inflation. 

It also has a healthy balance sheet with a 4.3x fixed-charge coverage ratio. That means the company can cover 4.3 times the costs of debt payments and equipment leasing.

Most importantly, its valuation is considered oversold by many analysts. The stock has fallen over 50% from its highs in the low-interest pandemic boom. It’s trading at a Price/FFO ratio of just 23.86, a 40% discount compared to its peak of 33x. It has a median price target of $138 from Wall Street analysts, a 34% upside from current price levels. 

Overall, Extra Space Storage is a strong company in a bad macroeconomic environment. The company continues to have strong fundamentals even though the stock price says otherwise. 

Prologis (PLD)

The Prologis (PLD) logo displayed on a smartphone screen.
Source: rafapress / Shutterstock.com

Prologis (NYSE:PLD) is a real estate investment trust with an investment strategy focusing on logistics facilities. Yahoo! Finance has 21 analysts predicting a 1-year price range on PLD to be between $123.00 and $154.00, with an average of $136.62.

PLD boasts healthy financials. The company reported $1.99 billion in revenue for Q3 2023, representing an 8.1% 1-year CAGR. PLD shows strong signs of profitability through a 75.99% gross profit margin TTM and a 55.2% levered FCF margin, both well above the sector medians. Management has been able to leverage liabilities to create value, as seen through $33.6 billion in total liabilities, which grew 57.8% year-over-year (YoY), but also $91.9 billion in total assets, which grew 50.8% YoY.

Prologis has grown total assets through its acquisitions, positioning the company for future growth. Prologis closed a $184 million deal with real estate development firm Creation for a 170-acre Airpark Logistics Center in Goodyear, AZ. With air traffic of the logistics center positioned to grow from city growth, the Logistics Center will become a good future revenue stream for the trust. Prologis also acquired 14 million square feet of industrial properties from Blackstone (NYSE:BX) for $3.1 billion. The properties complement the company’s investing strategy and allow for the expansion of its warehousing solution platform: Essentials.

Prologis has also created partnerships through development contracts and business models, further growing company value. Prologis has partnered with Skybox Datacenters to plan and build a 600-megawatt data center campus in Austin, TX. That comes in response to Austin’s rapid growth and appeal to top-tier tech talent. The partnership expands upon the success of another data center campus project in Austin from 2022. Prologis has partnered with U.K. supply chain specialist Bis Henderson to create a flexible storage warehouse model, allowing easy access to more storage when needed. This new model will attract new customers, expanding Prologis’ customer base upon further implementation.

Prologis is a REIT stock investors need to buy now because of its healthy financials, acquisitions that grow total assets, partnerships that expand development projects and innovative business models that will drive customer base growth.

American Tower (AMT)

American Tower Corporation logo on a smartphone with the website in the background on a computer screen. AMT stock.
Source: T. Schneider / Shutterstock

American Tower (NYSE:AMT), based in Boston, Massachusetts, is one of the largest Real Estate Investment Trusts (REITs) in the world. The company has many operations across the globe, including the United States, Brazil, Canada, France, Germany, India, Kenya, Nigeria and more. 

AMT is down 17% YTD. The Real Estate Investment Trust market is projected to grow $333.01 billion from 2022 to 2027, boasting a CAGR of 2.8%. American Tower reported PYQ3 revenue of $2.82 billion, up 5.51% YoY.

In July of this year, American Tower released its 2022 sustainability report. The report details the company’s obligation to various groups of people, such as employees, customers and stockholders to provide neutral-host infrastructure and push for a more sustainable operation of the company. Some advancements from the company in the past year include a 9.5% reduction in combined scope 1 and 2 GHG emissions compared to 2019, the growth of on-site renewable energy capacity to over 85 megawatts at nearly 15,000 sites and the opening of 124 new Digital Communities which provide access to technology and digital connectivity in underserved communities, bringing the global total to 445 across 15 countries. The commitment from American Tower to become more sustainable and help communities demonstrates the longevity and growth of the company.

Yahoo! Finance has 22 analysts examining the stock, 21 of whom rate it a Buy or Strong Buy. The average 1-year price target is $209.13, with swings ranging from $169.00 to $271.00.

The commitment to sustainability and strengthening communities signifies great future dominance in the market. 

On the date of publication, Michael Que did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

The researchers contributing to this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.

Michael Que is a financial writer with extensive experience in the technology industry, with his work featured on Seeking Alpha, Benzinga and MSN Money. He is the owner of Que Capital, a research firm that combines fundamental analysis with ESG factors to pick the best sustainable long-term investments.

Article printed from InvestorPlace Media, https://investorplace.com/2023/11/the-3-best-reits-to-buy-in-november/.

©2024 InvestorPlace Media, LLC