Retail REITs are starting to come back to life following months of underperformance as the coronavirus depressed in-person retail shopping. However, now there is some sort of pent-up demand effect in play as consumer spending in retail stores is above 2019 levels.
If your portfolio does not yet have a retail REIT, consider adding at least one today. Many stocks have dipped over the past couple of weeks due to the Delta variant, however, while there could be an increase in masking, shutdowns are not on the table this time.
Maintain the faith in the retail comeback, invest in one or several retail REITs and you stand a good chance of making money during the return to normal in the months ahead. Saul Centers, Inc. (BFS) and Cedar Realty Trust (CDR) are two such retail REITs worth considering.
BFS
BFS is a REIT that develops and manages shopping centers. BFS has a forward P/E ratio of 15.70, meaning it is fairly priced at around $46.50 per share. The stock has a 1.15 beta so it is likely to hold steady if the market suffers a massive decline.
BFS pays a 4.74% dividend. The stock is currently trading about $1 below its 52-week high of $47.83. BFS has a 52-week low of $23.49.
BFS has a B POWR Rating grade, meaning it is a Buy. The stock has B grades in the Sentiment and Stability components of the POWR Ratings. BFS has Cs in the Quality and Momentum components. Investors can find out how BFS fares in the rest of the POWR Ratings components such as Value and Growth by clicking here.
Out of the 36 stocks in the REITs- Retail space, BFS is ranked first. Click here to learn more about REITs - Retail stocks.
The analysts believe BFS has a bright future, setting an average target price of $48.33 for the stock. If BFS this price target, it will have increased by more than 9%. One analyst went as far as establishing a $51 price target for BFS. All in all, the stock's average analyst price target has increased by $4 in the prior 83 days.
CDR
CDR, a real estate investment trust with a portfolio of shopping centers anchored by grocery stores, was previously referred to as Cedar Shop Center. The REIT’s shopping centers do business in urban markets with high population densities, primarily along the East coast. CDR takes a cut from the revenue of these income-producing properties. It must be noted that CDR’s 1.50% dividend is relatively low compared to other REITs.
CDR has a forward P/E ratio of 7.43. This is an absurdly low ratio that indicates the stock is undervalued at $17.94 per share. CDR's 52-week high is $18.29 per share. The stock's 52-week low is $4.62 per share. CDR has a 1.61 beta so it is unlikely to make a drastic move in either direction if the market swings.
CDR has a B POWR Rating grade, meaning it is a Buy. The stock has Bs in the Sentiment and Value components of the POWR Ratings. CDR has Cs in the Quality and Growth components. Click here to find out how CDR grades out in the Momentum and Stability components.
Out of 36 stocks in the REIT - Retail segment, CDR is ranked second. You can learn more about the stocks in this segment by clicking here.
The analysts insist CDR is headed higher but not by much. The average analyst target price for CDR is $18.17, just a bit above its current trading price. One analyst has established a target price of $19 for the stock. Of the four analysts who have issued recommendations for the stock, two consider it a Buy, and two consider it a Hold.
CDR shares were trading at $18.14 per share on Thursday morning, up to $0.12 (+0.67%). Year-to-date, CDR has gained 81.46%, versus a 19.32% rise in the benchmark S&P 500 index during the same period.
About the Author: Patrick Ryan
Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management.
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