As the month of November approaches, the stock market still seems to show no real signs of stability. It’s natural for investors to start taking another good look at their portfolios to deal with the market uncertainties.
During a significant bear market, investors can consider several stocks that can help their investment portfolios bear the headwinds.
The real estate sector is one of the industries that generally fares well during tough economic times. The relative stability of the industry makes it possible for real estate investment trusts to perform well in a bear market.
Not every REIT can give a reliable performance through a recession. You need to own the right companies that can manage stable revenues and profits.
Just like companies from any other sector, even REITs run the risk of going bankrupt if the conditions turn for the worst. Taking advantage of the downside protection REITs provides requires a little homework.
Today I’m going to discuss Dream Global REIT (TSX:DRG.UN) – my top REIT pick for November — so you can decide if the REIT is a good buy or not.
A dreamy real estate company
Dream Global REIT is a major Canada-based real estate firm. Over the past few months, the stock received a lot of attention. Thanks to the substantial increase in share prices on the TSX, Dream Global stocks have a significant market capitalization of $3.23 billion at the time of writing. With shares trading at $16.65 per unit at writing, let’s take a better look at the REIT.
The past few months highlighted the underlying value of Dream Global REIT stocks. While investors could understand that the company had a lot of potential in terms of growth, the REIT was not correctly able to reflect on that through the share prices. Blackstone Group’s offer to acquire Dream Global REIT completely changed the outlook for the company.
There’s little else that brings out the underlying value of a company than another major business entity buying it up. Blackstone’s $6.2 billion deal to buy the Canadian real estate firm made the share prices for Dream Global jump by 17%. The share prices for Dream Global REIT increased, but they also became a lot more stable.
Dream Global REIT share prices are enjoying a high degree of stability compared to the rest of the market, right from the point that Blackstone acquired the Canadian REIT.
If you already own DRG.UN stocks, you should know that the stock is currently undervalued even at $16.65 per share, making it an excellent share to hold. If you’ve been observing Dream Global REIT and are a potential investor, now could be a great time to decide whether or not to buy the stocks.
I will say that there are always risks involved with any stocks. I would recommend that you consider adding the REIT’s shares to your portfolio, but don’t put all your eggs in one basket. Diversification is a reliable way to properly recession-proof your investment portfolio, and Dream Global could be a part of it.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Adam Othman has no position in any of the stocks mentioned.