My Top Real Estate Management And Development Stocks For 2015

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Includes: AAMC, ALEX, CBRE, CIGI, FOR, FRPH, JLL, JOE, KW, RMAX
by: Stan Stafford

Summary

In this series of articles, I will be reviewing individual industry sectors and selecting my favorite stock picks for 2015.

For Part 45, I will be reviewing the Real Estate Management & Development industry sector, taking a look at revenue/earnings growth and the overall financial stability of the companies.

Out of this group of reviewed stocks, my top pick for 2015 is Jones Lang LaSalle.

Overview

In this series of articles, I will be taking a look at various industry sectors and selecting what I believe will be outperforming stocks for 2015. In Part 1, I reviewed 47 stocks within the Aerospace and Defense industry sector. For part 45, in determining my favorite stocks in this sector for 2015, I will review the following Real Estate Management & Development stocks:

  • Alexander & Baldwin (NYSE:ALEX)
  • Altisource Asset Management (NYSEMKT:AAMC)
  • Brookfield Asset Management (NYSE:BAM)
  • CBRE Group (CBG)
  • Consolidated-Tomoka Land (NYSEMKT:CTO)
  • FirstService (FSRV)
  • Forest City Enterprises (NYSE:FCE.A)
  • Forestar Group (NYSE:FOR)
  • FRP Holdings (NASDAQ:FRPH)
  • Griffin Land & Nurseries (NASDAQ:GRIF)
  • Howard Hughes (NYSE:HHC)
  • Jones Lang LaSalle (NYSE:JLL)
  • Kennedy-Wilson Holdings (NYSE:KW)
  • Maui Land & Pineapple (NYSE:MLP)
  • Re/Max Holdings (NYSE:RMAX)
  • Realogy Holdings (NYSE:RLGY)
  • St. Joe (NYSE:JOE)
  • Tejon Ranch (NYSE:TRC)

Step 1

The first step I took to narrow down the list of possible options was to look at the earnings over the past five years of these stocks within the industry sector. I removed the following stocks from further review because of their negative earnings growth over the past five years:

  • Griffin Land & Nurseries
  • Howard Hughes
  • Maui Land & Pineapple
  • Realogy Holdings

Step 2

I then took the list of remaining stocks and checked the revenue growth of each over the past two years. I am removing any stocks that had flat (less than 3%) growth or saw a decline in revenue over the past two years. These stocks include:

  • Brookfield Asset Management
  • St. Joe
  • Tejon Ranch

Step 3

My next move was to examine the trailing PEG ratio of each of the remaining stocks. I removed any stock that had a PEG ratio over 2 to focus more specifically on fairly valued/undervalued stocks. These stocks included:

  • Consolidated-Tomoka Land

Step 4

The next set of data I reviewed was the Fundamental and Value Scores for each of the ten remaining stocks. These scores are calculated by YCharts and I have found them to be very useful when researching investment options. More details on each of the scores can be found here and here.

  Fundamental Score Value Score
Alexander & Baldwin 4 10
Altisource Asset Management 5 10
CBRE Group 8 4
FirstService 6 10
Forestar Group 6 7
FRP Holdings 7 3
Jones Lang LaSalle 9 8
Kennedy-Wilson Holdings 7 10
RE/MAX Holdings 6 NA

To determine the best stocks for 2015, I'm only taking into consideration stocks that have values of 7 or higher for both fundamental and value scores. Doing this left me with the following remaining stock:

  • Jones Lang LaSalle
  • Kennedy-Wilson Holdings

Step 5

My next step was to look at the book value of each company and to remove any stock that has seen a decrease in its book value over the past five years. However, none of the remaining stocks saw a decline in value during this time period.

JLL Book Value (Annual) Chart

JLL Book Value (Annual) data by YCharts

Step 6

My next step was to look closer at each stock remaining that passed all previous criteria and determine whether or not there were any reasons to eliminate them as great stock candidates for 2015. In doing so, I reviewed the financials of each company, the most recent quarterly report transcripts, and searched for any news items that warranted concern.

Jones Lang LaSalle

For its last quarter, the company posted a 15% increase in revenue and an increase in earnings per share from $0.38 to $0.94 compared to the same period last year. The company has seen strong revenue growth across all service lines and geographic segments. In addition to recently raising its dividend by 8%, the company continues to make moves towards ensuring future growth:

Kennedy-Wilson Holdings

For its last quarter, the company posted a 167% increase in revenue and a decline in earnings per share from $0.12 to a loss of $0.05 per share compared to the same period last year. The company continues to see strong revenue growth and impressive occupancy rates. The last year has been a busy one, with the company making many significant moves:

  • In May, the company made a Central CA 208-unit aparatment purchase. It was last year that the company purchased a 542-unit Northern CA apartment community.
  • In March, Kennedy Wilson issued and sold 7.5 million shares of common stock.
  • In January, Kennedy Wilson entered into a purchase agreement with a wholly-owned subsidiary of Winthrop Realty Trust to acquire a 61.5% interest in Vintage Housing Holdings, LLC.
  • Last year, the company purchased hotels in St. Andrews and Dublin.

Conclusion

Out of this group of stocks, Jones Lang LaSalle is currently my favorite stock. While I believe both Jones Lang LaSalle and Kennedy Wilson are worth considering, I feel that Jones Lang LaSalle's consistent revenue and earnings growth is far more favorable compared to Kennedy Wilson.

JLL Revenue (<a href=

JLL Revenue (NYSE:TTM) data by YCharts

JLL EPS Basic Chart

JLL EPS Basic (TTM) data by YCharts

I believe that Jones Lang LaSalle has a proven track record of making sound acquisitions and following successful strategies that lead to bottom line growth. Another factor that I like in regards to the company is that it has managed to keep its outstanding shares relatively steady over the last decade, while Kennedy Wilson's share count continues to rocket higher.

JLL Shares Outstanding Chart

JLL Shares Outstanding data by YCharts

While both stocks have performed similarly over the past five years, I believe that Jones Lang LaSalle is currently better positioned to reward investors moving forward.

JLL Total Return Price Chart

JLL Total Return Price data by YCharts

For part forty six of this series, I will be reviewing the Road & Rail industry sector. As always, I suggest individual investors perform their own research before making any investment decisions.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.