A bounce off the 10-week moving average in strong volume can
be a good place to add shares.
However,Digital Realty Trust 's (
) recent trip to its 10-week line showed contradictory
The stock fell to the 10-week line in the week ended July 20
in heavy volume. Ideally, you want to see a stock decline in soft
Yet, the bounce off the line came in strong volume, too.
The decline came four sessions before Digital Realty reported
second-quarter results. The company reported funds from
operations (FFO) grew 5% to $1.07 a share. The results fell 2
cents shorts of the Street's consensus estimate and represented
the third consecutive quarter of single-digit FFO growth.
Digital Realty Trust is a REIT that invests in tech-related
real estate, primarily data center properties. Three areas --
Silicon Valley, Dallas and northern Virginia -- account for about
a third of the company's properties.
At the Q2 call July 25, CEO Michael Foust said he wanted to
"clear up any uncertainty around the state of our industry and
Foust said the business "has benefited significantly from a
number of recent trends since the downturn in 2008, including the
outsourcing of data center requirements by corporate enterprises,
including large financial institutions, as well as the growth of
managed service providers."
He added that "the great opportunity for our business is to
convert the large enterprise users from building their own data
centers to outsourcing that function to DLR."
After-tax margin in Q2 was 17.2% -- up from the year-ago
period for the seventh quarter in a row.
The occupancy rate of the portfolio was 93.5% in Q2, down from
94.8% in Q1. The decline was primarily tied to termination of
failed government-backed Solyndra's lease in Fremont, Calif.
In February, Digital Realty increased its dividend from 68
cents a share to 73 cents a share. The current annualized yield
Since its November 2004 initial public offering, Digital has
increased its quarterly payout 11 times, including consistent
increases during the 2007-09 recession.