Roger's Road to Income

08/05/2005 12:00 am EST


Roger Conrad

Chief Analyst/Managing Partner, Capitalist Times

I'm always impressed at the breadth of knowledge shown by Roger Conrad. Under the "umbrella" of income, he has developed a leading expertise in a wide range of areas, as can be seen in this sampling of his latest ideas including a REIT, a clean energy play, and a water distributor.

"Even as housing values have soared, apartment rents have stagnated and vacancy rates have crept up, as would-be renters have used low mortgage rates to buy homes. Poor conditions mean residential REITs are cheap. Memphis-based Mid-America Apartment Communities (MAA NYSE) focuses on middle-market properties, with more than 38,000 apartment units either wholly or partly owned. First quarter results demonstrate sound management in the face of tough market conditions. The payout ratio of just 65.3% and moderate leverage of less than half capitalization safeguard the dividend of nearly 6%. High management ownership at 12% is another good reason to buy Mid-American the past few years, but that’s starting to change.

"One great way to bet is with exchange traded fund, Powershares Wilderhill Clean Energy Portfolio (PBW ASE), which tracks the performance of the Wilderhill Clean Energy Index. Because fuel cell, solar, wind, and other alternative energies are developing, clean energy stocks are notoriously volatile and vulnerable to disappearing entirely. By owning a basket, the ETF limits blow-up risk at individual companies, while providing a play on growing sector strength. Still below its price at the March launch, Powershares is a buy up to 15.

"Rapid industrialization and exploding populations are increasingly straining the world’s supply of safe drinking water. That’s triggered a bull market in water distribution and treatment stocks during the past few years. One that still has a long way to run is  Southwest Water (SWWC NASDAQ), which operates in more than 30 states and serves two million customers in small towns and rural areas. The largest division manages systems for municipalities that want to continue owning their water. The stock is the cheapest in the sector, selling for just 1.8 times book value and one times sales, despite being on track for double-digit profit growth. If you don’t yet own Southwest, it’s a buy up to 12."

  By clicking submit, you agree to our privacy policy & terms of service.

Related Articles on