STAG Industrial (STAG) is one of the more attractive companies that is trading in the sweet spot of e-commerce logistics, notes Bryan Perry, income expert and editor of Cash Machine.
STAG is a real estate investment trust (REIT) that is focused on the acquisition, ownership and operation of single-tenant, industrial properties throughout the United States.
As of September 30, 2020, the company's portfolio consisted of 462 buildings in 38 states, totaling approximately 92.3 million in rentable square feet.
Amazon (AMZN) sits at the top as its number one tenant with the federal General Services Administration at number two and XPO Logistics (XPO) at number three.
Although the industrial property market in the United States exceeds $1 trillion in total size, and STAG is positioned in 60 different industrial sub-sectors, e-commerce related tenants account for roughly 40% of its portfolio.
In the third quarter of 2020, STAG reported Q3 funds from operations (FFO) of $0.46 per share that was in line with analysts' estimates. Revenue of $117.3 million (+14.5% year/year) beats by $0.2 million.
STAG has beaten earnings estimates for four straight quarters. The currently forecast FFO of $1.84 easily covers the $1.44 per share annual dividend payout. At its current price of $29.80, the stock yields 4.85%. Dividends are paid on a monthly basis. Nice!
The stock recently traded to an all-time high of $34.50 in reaction to its latest earnings report. With the stock having pulled back 13.4% off this high, I find this buy point ideal. I am looking for the stock to trade north of $35 in the next 12 months, implying a total return of 22.3%.
Anytime we can buy into a secular trend where the consumer and business-to-business e-commerce is the key driver, I want us involved. Buy STAG under $31.
