Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Realty Income Corp (O), Douglas Emmett, Inc. (DEI): This Real Estate Firm Still Looks Attractive

Despite many real estate companies realizing record profits, the companies’ stocks are being hit hard from the Federal Reserve’s May announcement that it would taper off its asset repurchase program. Still, one of the following three companies stands out as a solid investment that will have you locked into profits.

Realty Income Corp (NYSE:O)

Realty Income Corp (NYSE:O) has solid footing with its long-term leases. The company will focus on these while decreasing the number of new developments and acquisitions. This refining period will allow the company realize greater profit margins from the long-term leases, which often require less capital than many of the large-scale projects — and they’re more reliable.

Often, the sale-leaseback agreements with tenants garner long-term contracts (about 15 years) that ensure capital is consistently coming to the company. These types of agreements put the responsibility of property taxes, maintenance and insurance on the tenants, saving Realty Income Corp (NYSE:O) a pretty penny.

Analysts also like this system. Consensus agreement pegs earnings per share as rising by 18% this year, and another 6% in the next. Restructuring costs could increase operating expenses, as the anticipated earnings per share is just a small fraction of expected revenue growth this year (57.1%) and next year (11%.) This stock shows a lot of promise with its exposure to the rental market, and that could help it dodge a potential bullet with the expected increase in interest rates.

AIMCO is barking up wrong skyscraper

Apartment Investment and Management Co. (NYSE:AIV)‘s move to focus on more upscale locations that don’t have a lot of space to work with is a challenging move to support. By focusing on one segment, the company will slim its portfolio and reduce its diversification. Furthermore, the upscale market will suffer a swift blow during an economic downturn as people look for cheaper housing. For now, I say all the power to AIMCO for focusing on this market, but without an exit strategy into cheaper properties it seems that the firm is walking a tightrope across an open volcano.

AIMCO is likely distracted by several perks in the sector including rent that generally increases faster than inflation and a higher barrier to entry. Those perks are pointless if no one is able to afford the rent, however.

Analysts see AIMCO increasing its profits in the next couple years, but I caution investors to be prudent about what could be lurking after 2014. The economy is rainbows and butterflies right now, but you should always be cautious about what’s to come and not bank on a firm for its short-term potential growth. Analysts think the company will increase its revenue by 4.3% this year and 2.1% next year. Even the short-term profits aren’t something to go singing in the rain about.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.