Alexandria Real Estate Equities Q1 2023 Earnings Preview
The real estate market’s future is uncertain, and there are indications of an impending housing market crash. Investors seek stocks that could benefit from the situation, while others seek more resilient stocks.
Real estate crises can result from a downturn in the economy, rising interest and mortgage rates, declining consumer confidence, and an oversupply of homes.
Demand for homes is decreasing, while supply is not improving fast enough, creating an unstable balance.
Following a period of remarkable growth, the United States appears to be on the verge of a potential crash, according to numerous indicators. With the housing market cooling down, it is time to double-check your portfolio.
Investors should seek real estate stocks likely to fare well in a downturn, such as companies with strong financials and diversified revenue streams.
Alternatively, investors may consider buying stocks that could benefit from a housing markets crash, such as mortgage lenders, REITs and companies specializing in distressed real estate assets.
Such stocks are riskier but could offer higher potential returns if the market moves as expected.
This list concentrates on non-real estate options. It highlights the importance of being creative when researching buying stocks before a housing market crash.
Defensive stocks that perform well in any situation feature prominently.
These companies boast tried and tested business models. So, you can’t go wrong investing in these options.
VZVerizon $37.32 LMTLockheed Martin $482.55 DGDollar General $218.22
Verizon (NYSE:VZ), the most prominent telecommunications company in the United States, leads in scale and customer base.
For the past 15 years, the company has consistently invested in enhancing its network strength, resulting in a devoted following. In addition, as one of the most dependable wireless carriers, Verizon consistently reports strong earnings.
Verizon’s commitment to network improvement and extension, rather than pursuing a costly media empire like AT&T (NYSE:T), has contributed significantly to its high-quality service.
While others pursued expensive strategies, Verizon directed a significant portion of its capital toward expanding and enhancing its existing networks.
Verizon is a defensive stock due to its sheer scale, and operational efficiencies offset any headwind during economic recessions.
However, the telecom giant doesn’t offer much top-line growth, with a modest 1.1% year-over-year sales increase forecasted for 2024. This has led to a decline of about 30% in the company’s shares over the past 12 months.
On the upside, Verizon’s shares trade at 7.64 times price-to-earnings and have a huge 6.70% annualized dividend yield. It is an appealing choice for investors searching for a haven in the volatile market.
Verizon could benefit from a downturn due to its ability to perform well in different economic conditions.
Lockheed Martin (NYSE:LMT) is a big defense industry company. Its shares rose 36.8% last year as investors favored companies with businesses not easily affected by the economy.
However, its shares have fallen at the beginning of 2023. This reflects the initial optimism among investors that the Federal Reserve may taper future rate hikes.
But, there are three reasons Lockheed’s stock may soon start going down: hot inflation, additional rate hikes, and a possible global recession.
Lockheed is a reliable defensive stock, mainly because of the stable nature of its core business. Around 70% of its annual revenue comes from contracts with the U.S. Department of Defense. The company should to generate significant revenue from its F-35 program until 2070.
Hence, it provides investors a robust long-term revenue stream and a decent yield of 2.45%. These two factors should attract investors concerned about another market-wide correction.
Dollar General (NYSE:DG) is often confused with Dollar Tree (NASDAQ:DLTR). Both companies attract a lot of interest. Incidentally, both are defensive stocks to buy before the housing crash. However, Dollar General is a better buy, in my opinion.
Dollar General stands out in three key areas. First, it has a large and expanding fleet of delivery trucks, owning over 1,600 tractor-semi-trailers and planning to own over 2,000 by year-end.
This gives the company better control over deliveries and reduces outbound shipping costs.
Second, Dollar General offers a wider selection of fresh groceries, including chilled and frozen packaged foods, fruit, and vegetables. It offers fresh produce at over 3,200 stores, with plans to offer it at over 10,000 stores.
Lastly, Dollar General has a tighter focus, while Dollar Tree is also the parent company of Family Dollar, accounting for half of its 16,000-plus locales. Dollar Tree’s stores are largely limited to goods priced at $1.25 after a modest price increase from $1, while Family Dollar sells goods at various price points.
In conclusion, while both companies are decent investments, Dollar General has more upside potential in the current inflationary economic environment, making it a better buy. It is one of the best stocks to buy before the housing crash.
That does it for this analysis. However, if you want to continue reading about Dollar Tree, this article from Thomas Niel is a great place to continue your research.
On the publication date, Faizan Farooque did not hold (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio.