The coronavirus has pummeled certain corners of the economy. In other corners, however, a robust recovery has already taken place. Some industries have benefited from a swell of stimulus spending, Fed intervention, and robust asset purchases.
Nowhere has this been more evident than in the real estate market.
Commercial real estate has been hammered over the last month as concerns about social distancing and the inability of companies to make rent pummel landlords. Some of the most well-managed mall owners, outlet center operators, and office building managers have taken it in the teeth. As we noted earlier this week, these REITs should be avoided until we have a complete understanding of what the U.S. Federal Reserve plans to do to provide support.
Hospital systems have all but been guaranteed full support by the federal government - and demand for data storage is booming at a time when millions of workers have moved into remote operations. Consumers are also buying more than ever online, and companies are reassessing their digital strategies.
But there is one more area of REITs for investors to be hyper-bullish on now.
Today, we're going to discuss a freight train of profits coming to one recession-proof industry - and how you can cash in on this "must own" sector.
This REIT Has a Top-Ranked Vertical
If you're looking for "stay at home" stocks, look no further than the overlooked cell tower industry. Just a few weeks ago, some people speculated that wireless companies might miss rents for the towers that transmit phone calls across the country.
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But cell tower REITs - the companies that host infrastructure for the wireless industry - have thrived.
So far this year, cell tower REITs follow only data centers in terms of performance. These are the only two REIT sectors that have shown positive returns, with cell towers clocking in about a 5.5% return this year.
The cell tower and wireless infrastructure REIT sector accounts for about $200 billion in market capitalization. We're primarily talking about firms with towers that host broadcast antennas owned by wireless companies like Verizon Communications Inc. (NYSE: VZ), AT&T Inc. (NYSE: T) and T-Mobile US Inc. (NYSE: TMUS). They also provide satellite hosting for companies like DISH Network Corp. (NASDAQ: DISH).
Investors looking at this sector have a right to be bullish. Mobile data traffic is expected to surge as much as 40% per year, over the next decade. The growth of the Internet of Things combined with the rise of major technologies like self-driving vehicles will continue to be a boon for the sector.
In addition, large cell towers will provide a massive mix of capacity and high-density coverage across the country with the integration of 5G. The fact that there are very few of these towers provides a very solid economic moat for this sector.
Finally, the expansion of cell tower REITs across the globe will grow as consumers continue to adopt wireless technologies and embrace mobile connectivity.
There are three major cell tower REITs. Let's take a look at all three.