Real estate is the top-performing asset of the last two decades. And it's one of the best assets to own in a period of low-interest rates.
With the Dow and S&P 500 sitting near record highs, a run on real estate is about to ensue once again.
Private equity and other Wall Street giants are building multibillion-dollar firms with one focus: to buy real estate assets that generate income and can push to new record levels.
One of the best ways to tap into the sector is through real estate investment trusts (REITs). These publicly traded vehicles offer a stable dividend and incredible upside.
But choosing between the hundreds of different REITs can be a challenge for mom-and-pop investors. That's why I use the Money Morning Stock VQScore™.
This system ranks 1,500 of the world's most profitable companies on a scale from 1 to 4.9, based on a proprietary algorithm developed by our team's top data scientists.
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Within the last 12 months, the VQScore has identified breakout returns for investors - like 67% on JBL, 93% on RH, and even 118% on SEDG.
Today, I've identified a REIT with a near-perfect VQScore, signaling that it's a great time to buy.
Buy This REIT for Huge Upside
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Tanger Factory Outlet Centers Inc. (NYSE: SKT) is the only pure-play public outlet REIT on the market.
In fact, Tanger has opened 27% of all new outlet centers built since 2011. In total, the firm operates and owns 39 upscale outlet shopping centers around the United States and Canada.
With roughly 14.3 million square feet of property, the company has more than 2,900 leased locations.
It has a diverse customer base of 510 branded companies that attract roughly 181 million visitors each year.
The company's ability to diversify its base is an intriguing factor that makes the company so attractive.
The firm's executive team has an average of 15 years in the business. With 58% of their properties located near major tourist destinations, they've become experts in selecting outlet centers around major metro centers or tourist destinations.
The firm also has a strong track record of reducing tenant churn and diversifying brands in its centers. Top-tier brands include Ascena Retail, Gap Stores, PVH, Under Armour, Nike, Tapestry, Carter's, Michael Kors, and American Eagle Outfitters.
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Right now, the company is on a rebound.
Last week, the firm reported earnings for the third quarter. Net income came in at $0.25 per share.
That was a significant reversal from the downturn it experienced in the same quarter of 2018. In Q3 2019, the company lost $0.24 per share.
The reason for the reversal is simple: improving metrics.
Its 9.9% occupancy cost ratio is the lowest in the industry. The next closest in the sector is 11.7% registered by the Washington Prime Group Inc. (NYSE: WPG).
With an occupancy rate of 95.9%, Tanger has the highest level off any mall REIT in the United States. In fact, the firm has held an occupancy rate of more than 95% for more than 25 years.
Right now, SKT stock is cheap. And based on its financials, it could easily be a takeover target in the near future.
First, the stock currently pays a mouth-watering 8.7% dividend.
The stock trades at a price-to-earnings ratio of 13.1. That is nearly one-fourth of the industry average of 42.1 times earnings.
The stock also trades at a ridiculously low price to 3.1 times sales. That is about a third of the industry average of 9.25 times sales.
The Bottom Line
Of course, the most important number for Tanger Factory Outlet Centers is its VQScore.
Right now, the stock has a near-perfect 4.8 rating. That signals a buying opportunity and a sharp rise on the horizon.
The stock currently trades at $16.37 per share, but I see potential upside to $25, just north of its 52-week high.
That price target represents a 52% gain for investors.
Add that upside with a dividend of 8.7%, and you're looking at a REIT that will turbocharge your portfolio well into 2020.
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About the Author
Garrett Baldwin is a globally recognized research economist, financial writer, consultant, and political risk analyst with decades of trading experience and degrees in economics, cybersecurity, and business from Johns Hopkins, Purdue, Indiana University, and Northwestern.