Rent prices increased by 5.8% in June compared to a year ago, marking the fastest pace since 1986, driving headline inflation higher. Rising mortgage rates caused potential buyers to give up and slip into the overcrowded rental market.
In addition, prices are expected to remain high. “Even if rents fall later this year, the CPI measure will likely drive rents higher still through 2023,” said Anna Wong, chief U.S. economist for Bloomberg Economics.
The average monthly rent for an apartment in Manhattan surpassed $5,000 for the first time in June, and brokers expect prices to rise further.
Rising rental prices should bode well for residential REITs Daiwa House Industry Co., Ltd. (DWAHY) and Boardwalk Real Estate Investment Trust (BOWFF), which could be ideal additions to your portfolio now. However, we believe that Independence Realty Trust, Inc. (IRT) is best avoided now, given his mounting debts.
Stocks to buy:
Daiwa House Industry Co., Ltd. (DWAHY)
Based in Osaka, Japan, DWAHY is active in the construction industry worldwide. It operates through single-family homes; Rental housing; Condominiums; Existing houses; Commercial facilities; Logistics, commercial and corporate facilities; and other industries.
DWAHY’s last 12 months revenue was $36.47 billion. His last 12 months gross profit was $7.10 billion while operating profit was $3.14 billion. Additionally, its trailing 12-month EPS was $2.82.
Analysts expect DWAHY’s revenue for the fiscal year ending March 2023 to be $33.43 billion, a 118.8% year-over-year increase.
DWAHY has gained 4.3% over the past month to close the latest trading session at $23.49.
DWAHY’s strong fundamentals are reflected in its POWR Rankings. The stock has an overall rating of B, which translates to Buy in our POWR rating system. POWR ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
DWAHY also has a B rating in growth, stability and value. It is ranked #1 out of 24 stocks in the REITs – Residential industry.
Beyond what is stated above, we also rated DWAHY for Momentum, Sentiment and Quality. Get all the DWAHY ratings here.
Boardwalk Real Estate Investment Trust (BOWFF)
BOWFF is a real estate investment company with variable capital. The trust owns and operates multi-family rental communities.
For the fiscal quarter ended March 31, 2022, BOWFF rental revenue increased 2.2% year-over-year to $118.30 million. Its net operating income rose 1.6% from the previous year’s value to $64.90 million. Funds from operations for the quarter was $34.50 million, reflecting a 3.8% year-over-year increase.
Street expects BOWFF’s revenue in the quarter ended June 2022 to be $94.08 million, indicating a marginal year-over-year increase. Its FFO per share is expected to improve 3.1% year-over-year to $0.62. BOWFF has also beaten consensus estimates for FFO per share in three of the past four quarters.
BOWFF shares have gained 4.6% over the past month to close the latest trading session at $33.60.
BOWFF’s sonic fundamentals are reflected in its POWR ratings. The stock has an overall rating of B, which is equivalent to Buy in our POWR rating system.
The company has an A rating in stability and a B rating in value and growth. The stock is ranked #3 in the same industry. Click here to obtain BOWFF’s Momentum, Quality and Sentiment ratings.
Stock to avoid:
Independence Realty Trust, Inc. (IRT)
IRT is a real estate investment trust that owns and operates multi-family apartment buildings in non-Gateway US markets.
IRT’s total revenue increased 172.8% year-over-year to $150.36 million during the fiscal quarter ended March 31, 2022. However, total expenses increased 220, 3% from the prior year quarter to $146.15 million. Total debt also rose 168.3% from the same period a year earlier to $2.54 billion.
The stock is down 17.9% year-to-date and 5.1% over the past six months to close its last trading session at $21.20.
The IRT’s POWR ratings reflect this bleak outlook. The stock has an overall F rating, which equates to a strong sell in our proprietary rating system.
IRT also has a growth rating of F and a stability, value and quality rating of D. It is ranked last in the same sector. Click here to see additional POWR ratings for IRT (Sentiment and Momentum).
DWAHY shares were trading at $23.48 per share on Thursday afternoon, down $0.01 (-0.04%). Year-to-date, DWAHY is down -18.19%, compared to a -15.85% rise in the benchmark S&P 500 over the same period.
About the Author: Komal Bhattar
Komal’s passion for the stock market and financial analysis led her to pursue her career in investment research. Its fundamental approach to stock analysis helps investors identify the best investment opportunities. After…