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Falling interest rates continue to push investors into the world of "alternative investments."
Rather than buying bonds or stocks or holding cash, savvy investors are turning to investments that don't have the same qualities of traditional investments.
These assets include private equity strategies, hedge funds, and real estate.
Unfortunately, too many mom-and-pop investors are priced out of these alternatives due to regulatory requirements, income thresholds, and stipulations around accredited investments.
But there is another way retail investors can tap into the booming real estate market...
I'm talking about real estate investment trusts (REITs).
Our top REIT for 2020 could climb to five times its current price, and shares yield a solid 7.9%. Click here to get the Best REIT to Buy for 2020…
REITs have historically provided investors with high, steady dividends by generating income from working real estate assets.
These alternative investments can outperform in any market, and they provide distinct tax advantages that you rarely find anywhere else.
Today, I'm going to talk about one of the bests REITs to own right now.
This REIT Is a "Strong Buy"
[mmpazkzone name="in-story" network="9794" site="307044" id="137008" type="4"]Listed as a publicly traded stock in 2015, Xenia Hotels & Resorts Inc. (NYSE: XHR) is an Orlando-based REIT with a terrific business model.
Founded in 2007, the company focuses its attention on the top 25 U.S. lodging markets.
Xenia owns 40 luxury, lifestyle, and urban hotels across 17 states.
Roughly 98% of its properties fall in the category of luxury or upper-upscale hotels.
Its operators and licensees include Marriott, Hyatt, Kimpton, Fairmont, and Hilton.
Three of its most notable properties are the Ritz-Carlton in Denver, the Ritz-Carlton in Arlington, Virginia, and the Waldorf Astoria in the Buckhead neighborhood of Atlanta.
All told, there are 11,167 hotel rooms within the portfolio.
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Recently, the company engaged in a steep round of capital investment and property optimization process.
Since 2017, the firm has invested about $200 million to upgrade its food and beverage outlets and acquire eight hotels. These eight hotels have averaged a GOP margin of 32%, compared to the average GOP margin of 39.8% at the other 32 properties.
This is an important difference. If the company can bring these eight hotels up to a margin that matches its other properties, it could see a big boost to its bottom line. Improving those margins along could drive up to $30 million in growth to its EBITDA over the next three years.
The firm expects to see positive economic developments in six of its top 10 markets. At the moment, only its Boston market faces serious headwinds due to the city's conference calendar and the underperformance of the Boston Red Sox.
In addition to operating in an increasingly popular space, this REIT is ridiculously cheap.
The REIT trades at a price/earnings ratio of just 17.2. That figure is roughly 60% lower than the industry average of 42.2 times earnings.
In addition, its price/sales ratio is just 2.1 times, well below the industry average of 9.7 times sales.
The company's book valuation is incredibly low, too. The average REIT in this sector trades at 4.9 times book value. Xenia, however, trades at a miniscule 1.4 times book value.
While these numbers tell you how inexpensive stock is compared to its peers, only one metric can tell you when the REIT's shares are poised to breakout: the Money Morning Stock VQScore™.
Now Is the Time to Buy Xenia
There are a ton of choices when it comes to real estate investment trusts.
Currently, the SEC has 225 registered REITs, with a total combined market cap of over $1 trillion.
So it is difficult to determine which are the best REITs to buy now.
The VQScore is our propriety stock screening system that allows us to track and rank stocks, including REITs. The system assigns every stock with a score from 0 to 4.9.
The higher the VQScore, the more likely the stock is going to break out in the weeks and months ahead.
Xenia Hotels & Resorts has a solid 4.4 rating, indicating it's a "Strong Buy" right now.
With interest rates falling and private equity firms pouring billions into real estate, I expect Xenia's portfolio to continue rising in value.
In addition, the luxury hotel industry remains largely free of major economic risks as their clientele will continue to frequent these locations.
The stock has potential upside of $30 over the next 12 months.
Combine a 5.2% dividend with a potential upside of 42%, and you have a REIT poised to outperform the market and most blue-chip stocks in the year ahead.
Robert Herjavec: Indisputable Proof That Anybody Can Get Rich Through Angel Investing
When Neil Patel launched the Angels & Entrepreneurs Summit, he had only planned to invite a small group of guests to join him and guest "Shark" Robert Herjavec... but then Neil revealed something truly shocking.
During this clip (about halfway through the event), he reveals indisputable proof that anybody can transform their life through angel investing.
We knew we had to show this event to everyone - the information is just too valuable to keep under wraps.
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.