5 TSX property stocks to watch as average rent reaches new high in GTA

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 5 TSX property stocks to watch as average rent reaches new high in GTA
Image source: © Sasinparaksa | Megapixl.com

Highlights

  • Average rent in the Greater Toronto Area reportedly grew by double-digit in Q2 2022
  • FirstService said its consolidated revenues jumped by 12 per cent YoY to US$ 930.7 million in Q2 2022
  • The MEQ stock soared by roughly 15 per cent in 52 weeks

Canadian investors could explore quality TSX real estate stocks like FirstService (TSX: FSV), Dream Unlimited (TSX: DRM), Colliers (TSX: CIGI) etc., as the Toronto Regional Real Estate Board (TRREB) reported that the average rent in the Greater Toronto Area (GTA) grew by double-digit to new highs in Q2 2022.

TRREB said on Thursday, July 28, that average rent for one bedroom jumped by 20.2 per cent year-over-year (YoY) to C$ 2,269 while two-bedroom rent spiked to 15.3 per cent YoY to C$ 2,979 in Q2 2022.

Amid rising average rent, here are five TSX real estate stocks that investors can watch:

1.     FirstService Corporation (TSX: FSV)

FirstService said its consolidated revenues jumped by 12 per cent YoY to US$ 930.7 million in the second quarter ended on June 30, 2022. The C$ 7 billion market cap real estate company pointed out that the latest quarter’s revenue included organic growth of six per cent.

The FSV stock climbed almost 10 per cent in the last one month. According to Refinitiv, FSV stocks appeared to be on a moderate trend, with a Relative Strength Index (RSI) of 58.56 on July 28.

2.     Dream Unlimited Corp (TSX: DRM)

Dream Unlimited is a Toronto-headquartered real estate firm with a market capitalization of C$ 1.38 billion. The small-cap firm reported increased revenue of C$ 53.21 million in the first quarter ended on March 31, 2022, compared to C$ 50.07 million a year ago.

Dream notably grew its earnings to C$ 42.17 million in the latest quarter, higher than a loss of US$ 3.7 million in Q1 2021. In terms of the stock performance, DRM scrip spiked by almost 23 per cent in 12 months. As per Refinitiv information, DRM scrips recorded an RSI value of 49.43 on July 28.

5 TSX property stocks as TRREB sees GTA rent at record levels in Q2©Kalkine Media®; ©Garis Studio via Canva.com

3. Colliers International Group Inc (TSX: CIGI)

Real estate service provider Colliers saw its stock zoom by nearly 14 per cent in the last month. CIGI stocks rose by almost 27 per cent from a 52-week low of C$ 125.97 (June 16).

According to Refinitiv findings, this TSX real estate stock held an RSI value of 67.72 on July 28, which indicates moderate-to-high momentum.

4. Mainstreet Equity Corp (TSX: MEQ)

Mainstreet Equity is a small-cap company focused on the residential real estate market. Mainstreet improved its rental revenue to C$ 44.95 million in Q3 2022 compared to C$ 39.45 million in the third quarter a year ago.

The MEQ stock soared by roughly 15 per cent in 52 weeks. Data from Refinitiv suggests that MEQ stock is experiencing a moderate trend as its RSI value was 58 on July 28.

5. Altus Group Limited (TSX: AIF)

Altus Group held a price-to-earnings ratio (which reflects overvalued or undervalued market conditions) of 175.9. The mid-cap real estate company also recorded a debt-to-equity (D/E) ratio of 0.67, signalling a low financial risk.

The AIF stock galloped by about 16 per cent quarter-to-date (QTD). According to Refinitiv, AIF stocks held an RSI value of 74.05 on July 28, which indicates an overbought market condition.

Bottom line

TRREB added that growing competition between renters could result in ‘strong’ upward pressure on average rent prices, and policymakers need to work on increasing rental supply online.

The TSX Capped Real Estate Index also dipped by almost 19 per cent this year as rate hike pressure continued to affect the Canadian real estate market. However, investors can explore these TSX real estate stocks for quality returns in the long horizon.

Please note, the above content constitutes a very preliminary observation based on the industry, and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks. 

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