Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Invitation Home INVH, American Homes 4 Rent AMH and Centerspace CSR.

Here are highlights from Thursday’s Analyst Blog:

3 Top Inflation-Beating REITs You’ll Regret Not Buying Soon

Higher fuel prices pushed up consumer inflation in the United States in August. This calls for investing in real estate investment trusts such as Invitation Home, American Homes 4 Rent and Centerspace as they provide natural protection against inflation.

Inflation Still Running Hot

Prices of necessary commodities continue to rise persistently. The Labor Department stated that the consumer price index (CPI) increased 0.6% month over month in August. It’s the CPI’s biggest monthly gain in 14 months. From a year ago, inflation moved up 3.7% in August.

The core CPI that tends to set aside the volatile food and energy costs also rose 0.3% last month, more than the 0.2% increase in the prior two months. The yearly rate of core CPI, too, increased 4.3%.

The cost of gasoline, food and shelter all perked up in August. Most importantly, airfares soared almost 5% last month following four successive monthly declines and contributed to the elevated inflation reading. What’s more, prices of trucks, cars, auto insurance and home furnishing also rose in August.

Nonetheless, the rise in oil prices in recent times predominantly increased price pressures. After all, higher oil prices push up transportation costs and, in turn, increase the price of essential goods sequentially.

Higher Oil Prices

Oil prices have ticked up lately as oil demand is widely expected to remain robust amid tighter supply. The Organization of the Petroleum Exporting Countries (OPEC) recently said that oil demand is expected to increase by 2.25 million barrels a day across the globe next year.

This is because major economies, including China, are expanding at a promising pace, which will result in more import of oil and boost demand.

On the other hand, both major oil producers, such as Saudi Arabia and Russia, have agreed to trim the production of oil till the end of this year. Such output cuts lead to the tightening of supply and boost oil prices.

REITs Acts as Hedge Against Inflation

Higher oil prices leading to elevated inflation may burn a hole in your pocket, but from an investment standpoint, investing in a real estate investment trust (REIT) seems judicious.

After all, property prices scale northward with a rise in inflation. At the same time, landlords charge more in terms of rent, resulting in higher rental income. Notably, real estate can be acquired through investments in REITs.

3 Solid Choices

Amid such inflationary pressure, one should consider investing in the following three REITs that carry a Zacks Rank #1 (Strong Buy) or 2 (Buy).

Invitation Home provides real estate services. It focuses on owning, renovating, leasing and operating single-family residential properties.

The Zacks Consensus Estimate for its current-year earnings has moved up 0.6% over the past 60 days. The company’s expected earnings growth rate for the current year is 7.2%. INVH, presently, has a Zacks Rank #2.

American Homes 4 Rent is focused on acquiring, renovating, leasing and operating single-family homes as rental properties.

The Zacks Consensus Estimate for its current-year earnings has moved up 1.9% over the past 60 days. The company’s expected earnings growth rate for the current year is 7.1%. AMH, now, has a Zacks Rank #2.

Centerspace is a real estate development company.

The Zacks Consensus Estimate for its current-year earnings has moved up 8.1% over the past 60 days. The company’s expected earnings growth rate for the current year is 5%. CSR, currently, has a Zacks Rank #1.
American Homes 4 Rent (AMH): Free Stock Analysis Report

Invitation Home (INVH): Free Stock Analysis Report

Centerspace (CSR): Free Stock Analysis Report

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