I’m Making A Watchlist For My Portfolio With These 3 Stocks
As we all know, coronavirus is dominating the headlines. And the economic consequences have been dire.
The market has tanked, but we will come back from this. I can’t say for sure when, but what I do know is that there are some incredible values out there right now. And I don’t know about you, but I’m making a shopping list.
I’ve got my eye on oversold leaders in many sectors, from pharmaceuticals to defense contractors. There are attractive closed-end fund bargains, preferred stocks, and even municipal bonds.
So rather than dwell on the negatives, today I want to briefly tell you about some of the opportunities I have on my watch list for potential additions to my premium High-Yield Investing portfolio.
This list is by no means all-inclusive. We will have much to cover in the coming weeks. But I want to tell you about these names now because the time may come very soon when we need to pull the trigger.
If you have anything on your own personal watchlist, send your requests to me at firstname.lastname@example.org.
3 Stocks On My Watchlist
1. Medical Properties Trust (NYSE: MPW)– Established in 2003, MPW has grown to become one of the nation’s premier healthcare REITs. The company owns 389 hospitals (41,000 beds) and leases them to experienced operators throughout the U.S. and Europe.
From its 2005 market debut through last month, the stock delivered a healthy total return of 554% — tops in the healthcare REIT sector. Following a powerful 40% advance last year, it seemed out of reach to value investors.
But MPW has backtracked from the mid-$20s to the mid-teens the past two weeks, erasing several years of gains.
The company is coming off a period of unprecedented expansion, having invested $4.5 billion in acquisitions last year. Most recently, it bought 10 acute care facilities from Life Point Health.
Restaurants and stores may be empty in this pandemic, but healthcare facilities certainly aren’t. This hospital landlord should spring back nicely once the panic subsides. Until then, enjoy the 7% yield.
2. Disney (NYSE: DIS)– Disney’s famed theme parks, normally teeming with thousands of visitors, have been turned into ghost towns. The pictures are eerie. Making matters worse, the Disney cruise fleet is grounded, and the shutdown of all major sports is wreaking havoc on the firm’s ESPN network. Even Disney studios (which have produced one billion-dollar blockbuster after another) can’t contribute right now given the closure of all cinemas.
That perfect storm is reflected in the stock price. If you wanted to buy a piece of Mickey’s empire last year, you had to fork over $120 to $130 per share. But the raging coronavirus brought this highflier down to $100, and then $90.
It has been six years since DIS traded at this affordable level. The company is currently valued at just 1.8 times book value, half its five-year average of 3.6. This is a rare pullback on an outstanding media/entertainment empire. While the 2% yield is mundane, I think DIS will bounce back into triple-digit territory once this virus is in check.
3. Extra Space Storage (NYSE: EXR)– Economic slumps generally don’t have much impact on the self-storage business. In fact, massive disruptions to the economy often boost temporary demand for these cubicles.
EXR is best in class. This is a former High-Yield Investing holding, which was sold long ago for valuation reasons at a tidy gain. Thanks to this selloff, it is fair game once again.
EXR owns and operates 1,800 locations in 40 states, representing 1.3 million storage units. These boxes are 92% occupied, feeding the company a steady stream of monthly income. EXR also manages another 650 locations for a fee on behalf of third-party owners.
The $0.90 quarterly dividend is backed by $1.26 in funds from operations (FFO). Management sees FFO rising by mid-single digits this year to top $5.00 per share.
EXR is a proven winner. The stock has outpaced every publicly-traded REIT over the past decade. And thanks to the coronavirus, it’s on sale.
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