Four REITs That May Join The S&P 500
In a recent research report, analysts from Credit Suisse updated their list of possible candidates to join the S&P 500.
The firm used qualities such as market cap, liquidity, domicile, public float and financial viability to determine those companies Standard & Poor's selection committee was likely to pick.
The 10 potential candidates in the Credit Suisse report included some real estate investment trusts (REITs), such as Annaly Capital Management (NYSE: NLY), General Growth Properties (NYSE: GGP), Realty Income (NYSE: O) and SL Green Realty (NYSE: SLG). Below, we take a quick look at how these four stocks have fared and what analysts expect.
Note that the analysts also felt Ametek (NYSE: AME), Equinix (NASDAQ: EQIX), Hertz Global Holdings (NYSE: HTZ), J.B. Hunt Transportation Services (NASDAQ: JBHT) and Verisk Analytics (NASDAQ: VRSK) could make the cut.
Annaly Capital Management
This investor in securities representing interests in or obligations backed by pools of mortgage loans is headquartered in New York City. It sports a market capitalization of more than $11 billion and a dividend yield equivalent that is near 13.6 percent..
The price-to-earnings (P/E) ratio is less than the industry average, but the long-term earnings per share (EPS) growth forecast is less than six percent. The operating margin is better than the industry average. And short interest is less than four percent of the float.
Only three of the 20 analysts surveyed by Thomson/First Call who follow this stock recommend buying shares. The mean price target, or where analysts expect the share price to go, indicates about nine percent potential upside. But that target is much less than the 52-week high.
Shares of Annaly Capital are down almost 17 percent year-to-date and reached a multiyear low earlier this month. Over the past six months, the stock has outperformed the broader markets, as well as smaller competitors such as Capstead Mortgage (NYSE: CMO) and Redwood Trust (NYSE: RWT).
General Growth Properties
This Chicago-based operator and manager of retail and other rental property has a dividend equivalent yield of about 2.2 percent and a market cap of more than $20 billion. The long-term EPS growth forecast is more than 15 percent, but the return on equity is in negative territory. Short interest is less than one percent of the float.
The consensus recommendation of analysts polled is to hold General Growth Properties shares, with seven of the 16 saying to buy to just one rating it at Underpeform. The mean price target is more than six percent higher than the current share price, though it is shy of the 52-week set back in May.
Shares are about seven percent higher than they were a month ago, as well as up more than 16 percent from a year ago. Over the past six months, this stock has outperformed competitors Macerich (NYSE: MAC) and Simon Property Group (NYSE: SPG), though it underperformed the broader markets.
This company makes investments in commercial real estate and is based in Escondido, California. Its market cap is more than $8 billion. Its distribution yield is about 4.9 percent. The P/E ratio is higher than the industry average but so is the operating margin. Short interest is almost eight percent of the company's float.
Just two of the 11 surveyed analysts recommend buying shares. Holding them has been the consensus recommendation for at least three months. The analysts believe shares have little head room, as their price target is only marginally higher than the current share price. That target is much lower than the 52-week high.
The share price is up more than six percent in the past month, though it has not recovered from a more than 17 percent plunge in late May. The stock has underperformed competitors Kimco Realty (NYSE: KIM) and Regency Centers (NYSE: REG) over the past six months.
SL Green Realty
This New York-based property developer and manager has a more than $8 billion market cap. Its distribution yield is about 1.4 percent. The P/E ratio is much higher than the industry average, and the long-term EPS growth forecast is about five percent. Short interest is about six percent of the float.
Out of 17 surveyed analysts, just seven recommend buying shares, though only one rates the stock at Underperform. The consensus price target is less than five percent higher than the current share price, and it is less than the 52-week high reached last week.
Shares have retreated about four percent from that high, but the share price is still up about 17 percent year-to-date. Over the past six months, the stock has outperformed the likes of Boston Properties (NYSE: BXP) and Brookfield Office Properties (NYSE: BPO) and the S&P 500.
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