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‘Load Up,’ Says Jim Cramer About These 2 Real Estate Stocks

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There was no good news for inflation in August. The annual rate fell slightly to 8.3% from July when he dropped from 8.5% to 8.3%, but was higher than expected. To make matters worse, the core CPI rate rose to 6.3% instead of declining. Consumers are suffering, and the pain is real.

But consumers aren’t the only ones hit hard by inflation. Retailers are feeling the strain, too, and he feels the strain twice: from consumers who are buying less because their wallets are being squeezed, and from their own suppliers, who are raising prices themselves. There is no easy way out of this, as interest rate hikes, the Federal Reserve’s main anti-inflationary measure, will inevitably push up credit costs, making goods more expensive for both consumers and retailers. deep recession.

Investors can be forgiven for not knowing where to put their money in such an environment. Jim Cramer, the famous host of CNBC’s “Mad Money” show, offers some advice on this.

“Most retail stocks are terrible right now, but the companies that own the best retail real estate are doing well,” Cramer noted.

Cramer further elaborated on the general position of commercial real estate firms. [retail] Chain stores are on the brink of bankruptcy and may even default on their rent payments. We are not even considering closing large stores…as long as the tenants stay in business. [real estate companies] You won’t be hit hard financially. To me it looks like an opportunity. “

Now let’s take a look at two real estate stocks on Cramer’s to-buy list.we used TipRanks database You can check them out, along with recent comments from Wall Street analysts, to get the latest data on both.

KYMCO Real Estate (Kim)

The first Cramer pick we’re eyeing is Kimco Realty, a real estate investment trust (REIT) focused on commercial spaces. In fact, the Jericho, New York-based company is the largest owner and operator of grocery-focused outdoor retail shopping centers. The company’s real estate portfolio focuses on prime suburban locations in major metropolitan areas, particularly in the Northeast, West Coast, Southeast and Sunbelt regions. As of the end of Q2 2022, Kimco owns interests in 533 shopping centers, and in total he has 92 million leasable square feet.

Several key metrics from the company’s 2Q22 earnings release show both the quality of its portfolio and continued demand for high-end retail space. First, Kimco’s utilization was up 40 basis points, and he was at 95.1% in the fourth quarter. Year-over-year, Kimco’s utilization increased 120 basis points.

Strong occupancy led to significant cash generation, with Kimco’s Funds From Operations (FFO) growing 17.6% year-over-year to $246.6 million (40 cents per diluted share). This metric is especially important for dividend investors, as FFOs typically support REIT div payments. Kymco’s current dividend was set at 22 cents per common share in July, which he announced on September 23. Annualized to 88 cents, this yields a yield of 4.2%. Kimco has gradually increased its dividend over the past two years.

In addition to Cramer, the stock caught the attention of Baird’s five-star analysts. Wesley GolladayKimco wrote: Despite the economic slowdown, tenant demand is solid and retention rates are high. The company remains aggressively at the forefront of external growth with structured investments, acquisitions and the acquisition of his JV interests in the second and third quarters. KIM also finds ways to create value through the repurchase of debt and preferred stock, cancellation of existing land leases, and entitlement of land for residential units. “

In addition to his upbeat comments, Golladay rates the stock as an outperformer (i.e. buy), and his price target of $27 suggests a ~30% upside potential over the course of the year. increase. (To see Golladay’s achievements, click here)

Overall, there are 16 analyst reviews set in recent weeks, of which 11 are buys and 5 are holds, giving the stock a moderate buy consensus rating. The average price target of $24.45 suggests a 17% increase from the trading price of $20.82. (See Kimco stock forecast on TipRanks)

federal real estate (FRT)

Next up is Federal Realty, a REIT based in Rockville, Maryland. FRT focuses on mid-Atlantic and Northeastern US shopping center properties, particularly high-end retail properties. The company also has locations in Florida, the Great Lakes region, and the Southwest, particularly California. FRT’s 2021 total revenue was $951 million.

The company’s strong performance continues this year. In his 2Q22 report, FRT noted a high occupancy rate of 92% for its portfolio properties, with a leasing rate of 94.1%. These figures represent increases of 240 basis points and 140 basis points respectively year-over-year. Small store leasing has proven particularly resilient since the height of the COVID crisis, rising 580 basis points from the pandemic low point. Small shop leasing in the recent second quarter was 89.3%, up 360 basis points year over year.

FRT has also moved to expand its footprint, spending approximately $434 million on three new shopping center assets in the second quarter. These new properties cover 93 acres and contain over one million square feet of leasable space. The company signed 132 new leases during the quarter, covering 562,111 square feet of total space, making 2Q22 its “most active quarter on record.”

Federal Realty has one of the strongest dividends in the REIT industry and has never missed a payout since it started making payments 55 years ago. The company has increased its dividend every year during his 55 years. The current dividend is $1.08 per common share, or $4.32 annualized, for a yield of 4.3%.

All of this points to a company with a solid footing in a niche market, with Raymond James Five Star Analyst RJ Milligan We rate FRT as a strong buy with a price target of $140. This figure indicates a potential share growth of up to 30% over the next year. (To see Milligan’s achievements, click here.)

Milligan writes in support of his bullish stance: There have been months of trading as investors have priced in a recession and retreated into more defensive REIT subsectors (such as netlease). With the stock trading just 17 times his 2022 guidance midpoint, many of our claims stand. Stocks continue to trade at historic discounts, but the fundamentals are better than ever…”

Overall, the 16 recent analyst reviews on this are evenly split, with 8 buys and holds respectively. This leaves the consensus view as a medium buy. FRT shares are trading at $100.60, with an average price target of $117.78 implying up to 17% gains over the course of the year. (See FRT stock forecast on TipRanks)

Visit TipRanks to find good ideas for stocks trading at attractive valuations. best stocks to buyis a newly released tool that brings together all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are those of the featured analyst only. This content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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