A good portion of my portfolio is dedicated to high yielding investments with low valuations as I think that makes sense in market with increasing volatility and an environment where 10 year treasuries yield just over 1.5%. I also like investing alongside insiders. So when I find a stock like the one below that has both qualities, I am a happy camper.
"Ashford Hospitality Trust (AHT) is a publicly owned real estate investment trust. The firm engages in investment and management of properties in the hospitality industry. It invests in the real estate markets of the United States. The firm primarily invests in hotels with a focus on the ownership of upper-upscale and upscale full-service and select service hotels in primary, secondary and resort markets. It also invests in mid-scale and luxury hotels." (Business description from Yahoo Finance)
6 reasons AHT is a bargain for income investors at $8.50 a share:
- This REIT yields a robust 5.3% and just raised its dividend earlier this year for the first time since having to cut payouts during the financial crisis.
- An insider picked up almost $300K in new shares in March.
- Hotel rates and occupancy continue to trend up, especially at the high end of the market. REVPAR has been growing at about 6% a year and that should accelerate as the economy improves.
- The stock is selling near the bottom of its five year valuation range based on P/B and P/S.
- Credit Suisse has an "outperform" rating and a $10 price target on Ashford Hospitality Trust. MLV & Co. also just initiated the stock as a "Buy".
- The stock is dirt cheap at 61% of book value and under 5 times forward FFO.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in AHT over the next 72 hours.