REITs are cheap: 3 SWAN stocks I’m buying: SLG, VNO, SPG

December 04, 2023 08:08 PM PST | By Invezz
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Real Estate Investment Trusts (REITs) have been unloved, unwanted, and forgotten in 2023 amid a prolonged period of high-interest rates. Office property values in key American cities have dropped while many companies face a wall of maturities in the next few years.

Bargain hunters spot opportunities when they see them. While many REITs will struggle to adjust in this new normal, some of them will survive and thrive. Here are some of the top Sleep Well at Night (SWAN) stocks I’m buying amid lingering fear in Wall Street. Watch here:

SL Green Realty Corp

SL Green Realty Corp (NYSE: SLG) is a leading American REIT that owns properties in New York, where it is the biggest commercial landlord. The company owns some excellent properties like One Vanderbilt Avenue, One Madison Avenue, and 100 Church Street. 

New York office market is going through challenges, which explains why SL Green Realty stock price has plunged by more than 41% from its highest point during the pandemic. There is adequate available space while many companies are opting for hybrid spaces.

SL Green Realty has taken measures to boost its balance sheet. On Monday, it reduced its monthly dividend and sold 625 Madison Avenue for $632 million. It will use these funds to reduce its corporate debt.

It is never a good thing to buy a company that has just slashed its dividend. However, in this case, the dividend cut was justified as the company moves to save cash and reduce its debt pile. 

SL Green’s technicals are also supportive. On the daily chart, we see that the SLG share price has jumped sharply in the past few weeks. Along the way, the stock has moved above the key resistance point at $42, the highest swing on September 20th. It has invalidated the double-top pattern.

SLG shares are approaching the 50% Fibonacci Retracement level and have also formed a golden cross pattern. Therefore, the outlook for the stock is bullish, with the next key level to watch being the 61.8% Fibonacci Retracement at $51.02.

SLG stock

Vornado Realty Trust

Vornado Realty Trust (NYSE: VNO) is another REIT similar to SL Green. It is one of the biggest office landlords in New York and other cities. Like other REITs, its performance has not been that stellar this year as challenges in the industry have continued.

Vornado’s recent results shows that the company’s revenue came in at $451 million in the third quarter, a 1.4% drop YoY.  Still, the VNO stock has several catalysts ahead. First, the company has not slashed its dividend even amid the ongoing challenges. It has also authorised $200 million share repurchases, of which it has spent $30 million, with $170 million to go.

Second, VNO stock has positive technical catalysts. On the daily chart, we see that the shares have formed an inverse head and shoulders pattern, one of the most bullish signs in the market. If this pattern works as expected, it means that the stock could surge to $40.35, which is about 45% above the current level.

VNO stock price

Simon Property Group 

I wrote about Simon Property Group (NYSE: SPG) in October and predicted that its stock was ripe for a breakout. In that report, I argued that SPG was one of the best retail REITs in the market, thanks to its ownership of some of the top locations. 

SPG reminds me of fear among investors about the retail sector and the death of the mall. That fear never materialised and while some companies went bankrupt, many strong ones have taken their spaces. 

The daily chart shows that the SPG stock price has been in a strong bullish trend in the past few months. It has jumped above the important resistance point at $126.73, the highest point in February. The shares have also rose above the 61.8% Fibonacci Retracement level.

Therefore, there is a likelihood that the stock will continue surging as buyers target the 78.6% retracement point at $137.

SPG stock

SPG chart by TradingView

The post REITs are cheap: 3 SWAN stocks I’m buying: SLG, VNO, SPG appeared first on Invezz


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