The commercial real estate sector has been booming since the beginning of the year. This rally is due to both an overall market bounce as well as the Fed's dovish talk. With interest rates being held down it allows commercial property to be priced at a premium. One of the Stars of this sector is Chicago based Jones Lang LaSalle JLL which has risen over 30% in the last 12 weeks, but don't be worried if you think you missed the train because JLL is still about 10% off its 52 week high. I believe that we can expect growth to surpass the 52 week high with more dovish verbiage the Fed expressed in the press conference this afternoon.
JLL just announced their acquisition on HFF based out of Dallas. This $2 billion deal will broaden their geographic portfolio and with HFF producing $800 billion in transaction revenue over the last 20 years, I see this acquisition as one achieved at a substantial discount. JLL is down a little north of 5% today because of analysts concern of this acquisition being so late in the real estate cycle. The concerns I believe are misplaced; analysts aren't taking into account the dovish fed extending this real estate cycle. I think this initial drop is a great buying opportunity.
The revisions trend has been positive lately, with estimates going up, as reflected in the Price & Consensus chart below. No doubt, the stock is currently rated Zacks Rank # 1 (Strong Buy).
JLL is trading at very competitive multiples with a Price/Earnings and Price/Cash Flow below the industry average this attractive buy is selling at a discount. With a 7.25% dividend to give investors some return stability, I don't see any reason why this stock shouldn't be added to everyone's portfolio before it's too late.
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