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PreMarket Prep Stock Of The Day: Agree Realty

April 23, 2020 2:05 pm
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PreMarket Prep Stock Of The Day: Agree Realty

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

For those who don't have the time to tune in live or listen to the podcast, Benzinga will highlight one stock that merits further discussion. This analysis is not a buy or sell recommendation.

One aspect of our economy that has been hit very hard by the COVID-19 pandemic is the commercial real estate sector. With the brick-and-mortar aspect of the retail market grinding to a halt, being the CEO of a commercial real estate company is a daunting task.

A crisis can bring opportunity for a company that is well-positioned financially and has the right mixture of tenants.. The CEO of one of those companies, Joey Agree of Agree Realty Corporation (NYSE:ADC), was the guest on Thursday's PreMarket Prep Show, making Agree Realty the PreMarket Prep Stock of the Day.

About Agree Realty

Agree Realty Corporation is a Bloomfield Hills, Michigan-based real estate investment trust engaged in the acquisition and development of properties net leased to industry-leading retail tenants. The company operates in 48 states and has more than 16 million square feet of gross leasable space.

The top three tenants in Agree's portfolio, comprising 15% together, are Walmart Inc (NYSE:WMT), Sherwin-Williams Co (NYSE:SHW) and TJX Companies Inc (NYSE:TJX). It should be noted that Agree's top tenant is trading just off its all-time-high.

Agree's Performance Since The Financial Crisis

After peaking in May 2006 at $37.70, the issue swooned in November 2008 to $8.35.

At its peak in February at $80.51, it was up a staggering 864%. Even Agree's current price of $61 still represents a 630% gain. 

Agree Follows The Broad Market Lower

As mentioned above, the company made its all-time-high in February and suffered with the broader market in March.

While the broad market bottomed out on March 23, Agree made its low for the move on March 18 at $45.94 and ended the session at $48.57.

Agree Rebounds Off The Low

Within five days, Agree stock traded over $60, ending the March 25 session at $59.24. It continued higher and recouped half of its losses for the decline when it made its high for the rebound on April 9 at $69, ending the session at $67.79.

The issue has had a steady retreat from that high, but over the last five sessions it has been finding support in a $1 range between $60 and $61.

Agree Moving Forward

It will be extremely difficult for Agree replicate its performance since its 2008 low with an almost certain recession on the horizon.

Just as the company pivoted away from Borders Group and Kmart during the financial crisis, Agree is building its war chest to take advantage of distressed assets that will become available at deeply discounted prices.

Its dividend yield of 3.8% provides for some price protection on the downside as the company navigates itself through yet another turbulent economic period.

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