Fire Sale: 2 Incredibly Cheap Real Estate Stocks to Buy Now

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Stocks across all sectors are down, but some of the biggest selloffs have been in high-quality REITs. Real estate is already one of the best industries to invest in for the long term, so the fact that so many real estate stocks are cheap today makes it one of the best to buy now.

However, not all real estate is defensive. And it’s important to understand that before the sell-off, many were trading at exorbitant valuations after the strong growth they’ve achieved over the past few years.

It is therefore crucial to find stocks that are trading undervalued, both relative to their recent valuations, but also from a historical perspective. And as always, finding stocks with high-quality trades that you would be comfortable owning for the long term is paramount.

With that in mind, here are two of the best real estate stocks to buy now and hold for years to come.

A leading Canadian residential REIT

There are many high quality residential REITs in Canada. Some are specifically growth oriented. Others have a ton of assets south of the border. But one of the best real estate stocks to buy now while it’s cheap is Canadian Apartment Properties REIT (TSX:CAR.UN).

CAPREIT is a massive REIT with diversified assets across Canada. Because it’s so large and its assets are located across the country, it helps mitigate many of the risks that other residential REITs face.

Plus, it’s a very liquid investment Canadians can make in a real estate industry that typically requires a ton of capital and a long-term investment horizon.

Besides its high-quality assets, one of the main reasons why CAPREIT is one of the best real estate stocks to buy right now is that at its current price, the REIT is undoubtedly cheap.

Pandemic aside, CAPREIT hasn’t seen its unit price into the mid-40s since the start of 2018. Additionally, looking at its valuation, CAPREIT is currently trading at a forward price to adjusted operating funds ratio (P /AFFO) by only 20 times.

It only briefly traded this cheap during the pandemic, and on top of the pandemic, CAPREIT hasn’t traded this cheap since the start of 2017. In fact, in the past five years, CAPREIT’s average forward P/AFFO is 26.5 times – well above where it is valued today.

So if you’re looking to cash in on the sell-off and want to buy some high-quality real estate stocks while they’re on sale, CAPREIT is one of the best you can buy, especially when it’s this cheap. .

One of the best real estate stocks to buy and hold for years

CAPREIT is certainly one of the best choices for investors. However, another top REIT worth buying in this environment is Granite REIT (TSX:GRT.UN), the massive industrial REIT with significant long-term growth potential.

In recent years, Granite has been one of the fastest growing REITs. Now that the real estate stock has fallen significantly and is trading incredibly cheap, it’s easily one of the best to buy.

Granite has seen demand for industrial real estate assets increase dramatically in recent years, which has driven much of its growth. Despite this impressive performance, the stock sold with all of its peers, making it one of the best real estate stocks to buy while undervalued.

At Granite’s current price, just below $80 for its units, the REIT is trading at a forward P/AFFO ratio of just 19.1 times. This is exactly what Granite was before the pandemic when its business started to see a massive increase in demand for warehouse space.

So, with Granite trading at the bottom of its 52-week range and around 25% off its high, it’s an impressive discount you won’t want to miss.

Therefore, if you are looking for high quality real estate stocks that you can buy at a discount today and hold for years to come, Granite is one of the first REITs that I would recommend investors consider.

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