Post Properties (
PPS
)
The housing numbers yesterday may have looked fairly strong, but
the bulk of the growth seemed to come from multi-family/rental unit
type housing. This is no mistake; rent rates in the US are
near all-time highs and they have been on the rise for a couple
years now after the crash in 2009, as doubtful buyers move into a
flexible, easy rent regimen.
If you live in a major metro area in the US, you might notice
many more condos available to purchase than for rent. Those
rentals are usually carrying big premiums because of less rental
inventory and still unsure homebuyers. Post Properties
manages many mid- to high-end communities in different markets
across the US, and is reaping the benefits of the rental boom.
Company Description
Post Properties is a REIT (real estate investment trust) that
focuses on providing resort-style garden apartments and
high-density urban apartments with an emphasis on resident service
and a strong brand identification. The operate assets across
the US in DC, Florida, Georgia, North Carolina, New York and Texas
in select cities.
Anecdotally, I can tell you that they not only have a prominent
brand presence in Dallas, but have shaped the city's neighborhoods
in a big way (for the better). They have a reputation for
quality in the city.
Post focuses most of their business on the Southern
US.
They also sell homes under the Post Preferred Homes
division. The ability to develop new properties for sale or
to convert existing assets into upscale for-sale housing will give
them an edge as the housing market improves and more buyers
emerge. Given the recent rental boom, the company has been
winding down this division.
For the time being, rentals (price and occupancy) remain
strong. This trend recently prompted Cantor Fitzgerald to
start their coverage of Post as a Buy with a target of $50.
Keep in mind that cheap housing and expensive rent rates could
create a shift in the housing market, driving people away from
apartment living. For Post, their amenities and quality
should help retain renters, at least for the next few quarters and
until housing truly begins its recovery.
Financial Profile & Earnings
Post Properties is trading at about 20 times forward earnings.
As a REIT they are required to throw off 90% of their profits
in the form of dividends. Currently the company is yielding
about 2%. They have managed to positively surprise analysts for the
last four quarters at an average of almost 20%.
Throughout 2011 the company raised guidance by over 30%, which
was more than any apartment REIT. As of their most recent
quarter, they generated 78.61 million in revenue and reported
earnings of 52 cents a share. They are expected to make 52
cents this quarter and $2.20 for FY2012.
We are seeing strong upside magnitude in PPS, with the consensus
estimates for current and next quarter as well as FY2012 and FY2013
all moving higher over the past 3 months.
Analysts expect Post to grow earnings by 12-13% by the end of
the current fiscal year.
Slow and Steady Wins the Race
Post Properties has been growing steadily for the past two
years. The most recent pullback might offer investors an
advantageous entry for a long position. While capital
appreciation has been fairly stable in the stock, investors also
have a nice dividend while they ride the oscillations in the
market.
PPS is just above its 50-day moving average of $43.29 which can
be viewed as near-term support. Below that is the 200-day
moving average of $40.84. PPS has managed to stay above both
of those levels for the past 18 months, falling below them during
sharp market pullbacks.
Post outpaced the S&P 500 by 17.53% over the past
year. It tends to have a little more volatility than your
average REIT.
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Flash forward 8 months and EXR is trading 36% higher and looking
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PBH
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worth looking into. In less than 30 days since that report
the stock has gained 20% in value, reported a strong quarter and
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As the market melts higher and investors look for stability
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O'Reilly Automotive (
ORLY
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Landstar System Inc (
LSTR
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NCR Corporation (
NCR
)
If you've been around the markets long enough, you may remember
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Jared A Levy is the Momentum Stock Strategist for Zacks.com. He
is also the Editor in charge of the market-beating
Zacks Whisper Trader Service.
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PPS
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