If you’re like me, you like to purchase things when they are on sale.
You’ll load up on hamburger meat and freeze some when you can buy two pounds for the price of one…
Or you wait around for something you really want to buy – that no one else is purchasing – and watch the price drop and drop until you get it on the cheap.
That same pattern holds for stocks. But it’s ironic how most market participants get scared when they see their favorite stocks go on sale.
In the world of investing, the term used when too many people are selling and too few people are buying is “oversold.”
At this point, the price of the asset is likely trading for well below the true market price. And you might be able to snatch a bargain when you combine “oversold” with a metric that signals that a stock is poised to break out in the near future.
For those reasons, we recommend the Money Morning Stock VQScore™ system.
Our proprietary stock ranking algorithm gives every public stock a score from 0 to 4.9. The higher the score, the more likely it is to break out.
Any stock that trades above 4.0 is rated a “Strong Buy.”
Today, I’m going to unpack a diversified REIT poised for incredible gains at current trading levels.
The Best REIT to Buy Cheap Now
This week, we’re eyeing a real estate investment trust (REIT) that finds itself in a sweet spot of the global markets.
With interest rates sitting near record lows, investors are pulling away from bonds and turning to assets that can generate income and provide appreciation upside.
Tack on the fact that REITs have these qualities on top of favorable tax benefits, and you have a must-own investment class…
Today, I’ve found an “oversold” REIT that provides nothing but upside for investors.
American Assets Trust Inc. (NYSE: AAT) is a San Diego-based, vertically integrated REIT.
The company has been in business for more than 50 years and operates in premier markets on the west coast.
The firm serves markets with very high barriers to entry in places like Southern California, Northern California, Oregon, Washington, and Hawaii.
What investors should really love about the current oversold position is the fact that this is a very diversified REIT. So, any number of real estate catalysts will lift this unit price higher.
The firm owns a retail portfolio of more than 3.2 million rentable square feet. It operates another 2.7 million square feet in office space.
It also has one of the most famous mixed-use properties in the world, called the Waikiki Beach Walk. The property holds 97,000 rentable square feet of retail space, a 369-room all-suite hotel, and over 2,112 multifamily units.
Other properties include the Waikiki Beach Walk in Honolulu, Hawaii; La Jolla Commons in San Diego; the famous One Beach Street in San Francisco; and The Landmark at One Market in San Francisco.
As you can see, American Assets Trust maintains several eye-popping numbers that should entice investors.
In addition to having 97.8% of its retail properties leased, it has an average remaining lease time of six years.
Now Is the Time to Buy AAT
The company’s relative strength index (RSI) sits just around 30 – which would signal that the REIT is currently oversold.
But the real number you need to know is 4.2.
That figure is the Money Morning Stock VQScore™ for American Assets Trust, putting it squarely in our “Strong Buy” zone.
Shares of American Assets Trust traded at $44.36 per share at the close of Tuesday’s trading.
But I see upside of about $65 per share on top of the 2.7% dividend it’s currently paying.
That price target represents upside of 46.5%.
— Garrett Baldwin
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Source: Money Morning