- These five real estate stocks to buy combine value and growth to hedge against high inflation as selling conditions in the US housing market remain strong.
- Capital loan (RC): This company is trading at an 8.5% discount to its book value per share with a dividend yield of 11.65%.
- Financial MFA (MFA): Very strong Q1 2022 earnings and revenue are supporting the current share price.
- Gamma CAF (AFCG): This company beat first-quarter 2022 earnings and revenue estimates and has a dividend yield of 12.91%.
- AG Mortgage Investment Trust (GLOVE): MITT is trading at a 44% discount to its book value per share.
- Sachem Capital (SACH): Trading near its 52-week low, this company represents a great investment opportunity with an 80.3% increase in revenue in the first quarter of 2022.
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Real estate, I believe, is a sector that should not be correlated with the stock market and the bond market, because it is a different asset class. After the financial crisis of 2008 which fueled a real estate bubble, things seem to have changed a lot. The real estate market is strong and resilient in the United States Investing in real estate is a good choice because almost everything, from stocks to the cryptocurrency market, has come under selling pressure in 2022. Real estate is more of a necessity than pure speculation.
People have to buy houses, move and leave an inheritance for their children. Real estate offers diversification in a well-balanced portfolio, cash flow and the potential for capital appreciation. Plus, investing in real estate stocks can also help you reach your retirement goals. In these times of high volatility in the capital markets, this list of real estate stocks to buy is based on safety. I focused on real estate investment trusts (REITs) that pay attractive dividend yields, acting as a safety net against any further declines in stocks. Plus, they can be a hedge against inflation and a tool to build wealth with consistent compound income generation.
Here are five real estate stocks to buy now:
| RC | Loan Capital Corporation | $14.64 |
| MFA | MFA Financial, Inc. | $13.48 |
| AFCG | AFC Gamma, Inc. | $16.92 |
| GLOVE | AG Mortgage Investment Trust, Inc. | $7.95 |
| SACH | Sachem Capital Corp. | $4.53 |
Real Estate Stocks to Buy Now: Ready Capital (RC)
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Capital loan (NYSE:RC), founded in 2017, is a multi-strategy real estate finance company specializing in corporate real estate-backed loans. Its lending programs include categories such as small business, bridge financing, commercial mortgage-backed securities, fixed rate and residential loans, among others. The PE ratio (TTM) of 7.11 is very low, but the forward dividend and yield of $1.68 and 11.65%, respectively, are high. Moreover, they are more than sufficient to cover inflationary pressures as long as they persist.
Ready Capital shares have losses of almost 6.4% in 2022, which is moderate. In its first quarter (Q1) earnings report, the company reported a “net book value of $15.22 per common share as of March 31, 2022,” representing a discount of approximately 8.5% to in its share price of $14 at the close on May 11.
Financial MFA (MFA)
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Financial MFA (NYSE:MFA) operates as a REIT in the US market and was established in 1997. Its investment portfolio includes residential mortgage assets, agency MBS and whole residential loans. The shares have a PE ratio (TTM) of 5.14 and offer a forward dividend and yield of 1.68 and 12.52%, respectively.
With losses of around 26% in 2022, the high dividend yield significantly mitigates the decline in the share price. The one-year estimate target is 18.25, a potential upside of 30% from the closing price of $13.94 on May 11.
MFA Financial beat earnings and revenue estimates for the first quarter of 2022. Earnings per share (EPS) of 53 cents was above the estimate of 46 cents. Additionally, revenue of $63.05 million was 14.02% higher than the estimate. In 2021, net income increased by 148.24% to $327.83 million.
Real estate stocks to buy now: AFC Gamma (AFCG)
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Gamma CAF (NASDAQ:AFCG) is a REIT established in 2020 that provides institutional loans to high-quality cannabis growers across the country at various levels of production, from cultivation to distribution. A REIT supporting the cannabis space sounds very interesting.
The company beat first-quarter estimates on EPS and revenue. Earnings of $0.62 per share were above the estimate of $0.61 per share. Additionally, revenue of $18.64 million for the quarter was 8.1% higher than the estimate.
AFCG shares have a one-year valuation target of $25.68 and a forward dividend and yield of 2.2 and 12.91%, respectively.
In 2021, sales growth was explosive, rising 589.72% to $38.59 million.
AG Mortgage Investment Trust (MITT)
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AG Mortgage Investment Trust (NYSE:GLOVE) was founded in 2011 and is a residential mortgage REIT suitable for value investing and income generation. The stocks have a PE ratio (TTM) of 1.5, which is very low. Meanwhile, MITT shares offer a forward dividend and yield of 84 cents and 10.67%, respectively.
The one-year target is $10.70, a potential upside of nearly 42% from the stock price of $7.62 at the US stock market’s close on May 11. Another factor that makes shares of AG Mortgage Investment Trust a deep value play is that the company reported a book value per share of $13.68 as of March 31, 2022. This is a discount of almost 44% from the last share price.
In 2021, revenue growth and net income growth increased by 137.25% and 124.71%, respectively.
Real estate stocks to buy now: Sachem Capital (SACH)
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Sachem Capital (NYSE:SACH) is a real estate finance company founded in 2010. Its lending programs include fixed and reversible loans, new construction loans, and distressed/seizable loans. The stock has a 52-week range of $4.26 to $6.55 and its closing price of $4.41 on May 11 is just 3.5% above its 52-week low. . Although buying stocks near their lows can be very risky, there are two main reasons to be bullish about shares of Sachem Capital.
First, the forward dividend and yield of 48 cents and 10.69%, respectively, are very attractive as the stock market is currently very volatile. Second, revenue grew 80.3% to $10.3 million in Q1 2022 year over year.
Revenue growth has accelerated over the past two consecutive years, reaching 46.70% and 63.55% in 2020 and 2021, respectively. The stock also has the same trend for net profit, with growth of 45. 16% and 48.09% for 2020 and 2021, which is very bullish.
As of the date of publication, Stavros Georgiadis, CFA does not hold (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.
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