The last two times the market returned more than 18%, real estate stocks performed the best over the next six months. (The previous two times, the real estate sector of the S&P 500 didn’t even exist.)
So, we’re going back to that sector to outperform in the second half of this year.
And like we did last time, we’re going with the stocks that have had the most insider buying of late.
Here are the recommended names:
Each of these stocks has had some struggles of late. The insiders who are reaching into their own pockets to buy shares see serious upside here.
In addition to the insider buying, this sector is also seeing the lowest mortgage rates since the end of 2017. That helps buyers buy and owners refinance.
Many of you are likely familiar with the name Re/Max Holdings Inc. (NYSE: RMAX). I see its “home for sale” signs often.
The company sells residential and commercial real estate around the world. It has more than 125,000 agents in at least 110 countries.
When this stock went public in October 2013, nine insiders bought shares on the open market at $22. They spent more than $1.1 million.
Over the next four years, those shares tripled! And that doesn’t count the additional 15% they received in dividends over that stretch.
Today, shares are less than $10 above those 2013 lows. And insiders are at it again.
Three of them — including co-founders David and Gail Liniger — bought $22 million of shares on eight trading days in June.
Re/Max’s revenue and free cash flow are growing. We want to take advantage of this recent sell-off before the market remembers this stock will benefit from today’s lower rates.
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Trinity Place Holdings Inc. (NYSE: TPHS) is the smallest stock on the list, but it owns and is developing property in the real estate mecca of the U.S.: Manhattan, New York City.
The jewel is 77 Greenwich Street. This new 500-foot tower is being built next to the famous Trinity Church, and is within a block of the New York Stock Exchange. Prices for a one-bedroom condo start at $1.78 million. Alexander Hamilton is buried near there. If you’re ever in the neighborhood, I encourage you to visit his white marble pyramid grave in the cemetery next to the church.
Trinity Place expects to complete the 300,000-square-foot building by 2020. And units are already selling fast.
The company also owns two buildings in Brooklyn, a seven-acre property in Paramus, New Jersey, and a leased property in West Palm Beach, Florida. Walmart anchors the 12-acre Florida parcel.
The company estimates the net asset value of its shares is more than $9. That would be great, but it’s OK even if it’s less. Today’s sub-$4 price makes buying here a no-brainer.
Tejon Ranch Co. (NYSE: TRC) is one of the largest private landowners in California.
Its major asset, Tejon Ranch, was established in 1843 as a Mexican land grant. Today, the 270,000-acre property sits just off Interstate 5, about 60 miles north of Los Angeles.
It generates cash flow from operations there, including its Tejon Ranch Commerce Center. This center includes distribution centers for major companies, as well as retail shopping and outlets.
Tejon Ranch is also in the process of permitting three residential communities. Together, they will host 35,000 homes and more than 15 million square feet of commercial space.
Shares have fallen recently because it’s working through a legal challenge associated with one of these communities.
Management is confident this will go forward, though. It has methodically planned these communities with environmental groups such as the Sierra Club, Audubon California and others.
And they’re only 10% of the 270,000-acre property. Keeping a small footprint will maintain the natural beauty of the area while delivering returns to shareholders.
The temporary lull is offering us a solid opportunity to buy shares below $18 each… Full story at Banyan Hill