4 Growth REITs For Risky Times

Summary

• We’ve been overweight technology-based REITs for quite some time. That’s because we recognize that cell towers, data centers, and logistics are the REIT “trifecta” with the best overall returns.
• CyrusOne has been the focus of merger and acquisition activity lately. We believe QTS is the logical takeover target, and we’re modeling returns of 15% over the next 12 months.
• We modeled City Office’s AFFO per share to grow by 8% in 2020. As a result, we believe it will continue to improve its payout ratio.
• Year-to-date, Vici has returned 26.9%.and we don’t think its proper growth prospects are yet priced in.
• Looking for a portfolio of ideas like this one? Members of iREIT on Alpha get exclusive access to our model portfolio. Get started today »

Is the glass half-empty or half-full?

It all depends on your perspective, I suppose.

A committed optimist, for instance, can look at the current investing environment and smile for so many reasons, such as:

1. We’re looking at record-low unemployment – and across the board, at that. Just about every subcategory of American life. The biggest complaint about the U.S. job market right now is that there might not be enough workers to go around.
2. The federal tax burden on American families and corporations alike has gone down. You don’t have to employ expensive tax consultants to get a break these days. It’s built right into Uncle Sam’s expectations.
3. Regulations are down as well, allowing more business ideas and startups to emerge. No wonder then that small business optimism is so high.
4. Our natural gas production is up too, lowering our reliance on foreign oil.

What’s not to love?

Photo Source

Then Again, There’s the Trade War With China

A committed pessimist, of course, has an immediate answer to our optimist’s question up above. Many of them, actually. He’s just waiting to unveil all the reasons why the current American environment is worth frowning over.

For instance:

1. The country seems to be utterly divided over politics. And politics is everything these days.
2. The world may or may not burn up in the next 12 years (depending on who you talk to. Since we’re talking to a pessimist, I suppose it is.)
3. An asteroid could collide with Earth. In 65 years. If something knocks it off its current trajectory 73,000 miles outside of Earth’s atmosphere.
4. The trade war with China continues to play havoc with investors’ mental health.

Personally, I’m hardly the hard-core pessimistic type. But since I know a lot of people are worrying about the stock market’s health. Let’s focus on

Analyst’s Disclosure:I am/we are long CIO, VICI, QTS, IRM. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.