“Let your winners run.” Most investors have heard that sage advice even if it is easier said than done. The temptation to take profits off the table is often too great to ignore. Many times investors hang onto falling stocks hoping for a rebound while cutting the knees out from under their best performers. By stripping your portfolio’s growth engine, you handicap your long-term gains.
But maybe stocks hitting a new 52-week high have maxed out their capabilities. It could be time to employ that other well known investing maxim of buying low and selling high.
Knowing when to stay and when to run isn’t always so simple. Let’s look at the pair of stocks below that just hit fresh, new highs and see whether we should hang on for the next leg up or bail before they crash and burn once more.
Key Points About This Article:
- More often than not, investors are better off letting their winners run instead of taking profits and deploying the money into depressed stocks.
- While it can be difficult to discern when to stay and when to go, examining stocks that just hit 52-week highs is a good place to look for stocks with strong momentum behind them.
- If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.
Agree Realty (ADC)
Real estate investment trust (REIT) Agree Realty (NYSE:ADC) not only hit a new 52-week high, but also just reached an all-time high of almost $75 per share. The stock is up 19% this year and 41% above its low point.
REITs have been an underperforming sector for several years with the Schwab U.S. REIT ETF (NYSEARCA:SCHH) losing 1% over the past three years compared to a 27.5% total return by the S&P 500. Much of that loss is due to the high interest rate environment we’re in. REITs profit on the difference between the rates they earns on assets and the rates they pay on borrowings. When interest rates are high, those spreads narrow considerably.
Agree Realty, though, has been a long-term, consistent winner, generating compound annual total returns of 11.8% for investors since it was created in 1994. This is due in large measure to a well-diversified portfolio of 2,200 strong retail properties that house tenants including Walmart (NYSE:WMT), Tractor Supply (NASDAQ:TSCO), and Dollar General (NYSE:DG).
Agree has also grown its adjusted funds from operations (AFFO) per share at a robust annual rate of 7%. AFFO is an important metric for REITs much as free cash flow is for regular companies. The REIT also pays a monthly dividend that yields 4% annually.
The company has a solid foundation beneath it and enjoys the prospects of interest rates getting cut, perhaps as soon as this month. That should allow profits to expand and ADC stock to hit new highs.
VICI Properties (VICI)
Another REIT hitting a 52-week high is casino REIT VICI Properties (NYSE:VICI). It owns the real estate under Caesars Entertainment (NASDAQ:CZR) casinos, MGM Resorts‘ (NYSE:MGM) MGM Grand in Las Vegas, and Apollo Global Management’s (NYSE:APO) Venetian Resorts.
Spun off from Caesars seven years ago, today it is one of just two REITs focused on the gaming industry with the other being Gaming & Leisure Properties (NASDAQ:GLPI). An investment in VICI Properties is a bet on the continued growth of Las Vegas.
According to the Las Vegas Convention & Visitors Authority, visitor volume is up 3.1% in 2024 through July, though July’s numbers declined slightly by 0.4%. While convention attendance is down 1.5% year-to-date, that has more to do with convention timing and one large one that was held last year in July that didn’t repeat this year. But average daily room rates and revenue per available room are both advancing well above 2023’s figures.
The continued healthy growth in travel and tourism bodes well for VICI, which operates on a triple net-lease basis. That means its tenants are responsible for taxes, insurance and rent, which greatly reduces VICI Properties overhead. It allows for strong AFFO growth as well, which has expanded at a 9.5% annual clip over the last three years and is up 11.4% year-over-year. VICI stock is up 6% so far and is 20% higher in the last three months.
The REIT also has a strong track record of raising its dividend, which currently yields 5%. Since being spun off from Caesars, VICI Properties has a better than 7% compound annual growth rate in the payout. With a lower interest rate environment just around the corner, expect the REIT’s fundamentals to markedly improve.
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