This TSX Real Estate Stock Performed Well Amid the Pandemic

Here’s why you can look to add this little known real estate stock to your portfolio.

| More on:
stock data

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

It’s hardly a secret that many stocks were oversold when the country went into a lockdown in mid-March this year. A few stocks were oversold as investors over-estimated the impact of the lockdown on the company or under-estimated the resilience of the company.

Real estate service provider  Colliers International Group (TSX:CIGI) was one such stock that was trading at $119 before it crashed to $62 in mid-March, losing close to 50% in market value. The company’s primary business is real estate management and serves a wide base of corporate and institutional clientele, operating across the world, including the Americas, Europe, Middle East, and Asia. When the lockdown hit, it was assumed that the real estate sector would be battered and the assumption reflected in Colliers’ stock price.

However, the company has managed to tide over the uncertainty and its stock price has steadily risen from $62 to over $94 today. Colliers recently announced its results for the third quarter of 2020, and it’s not difficult to see why the price recovered since March.

Colliers sales fell 7%

Third-quarter revenues for Colliers were $692 million, down 7% compared to the same period in 2019. However, adjusted EBITDA was $92 million, up 8% from 2019. Revenue from the Americas was $423 million, similar to 2019. EMEA revenue was $117 million, down 19%, while Asia-Pacific took the worst hit as its revenue fell 23% to $110 million. Investment management revenues were up 4% at $42 million.

The results are much better than expected. Colliers is very bullish about its ability to ride out the pandemic. Jay Hennick, Globa Chairman, and CEO said, “While uncertainties persist, we expect our full-year results to come in stronger than anticipated. As a result, we have increased our operating assumptions for the balance of the year.” Its guidance for 2020 says that the updated revenue range for 2020 forecasts a decline between 10% and 15% decline.

A key market in Q4 for Colliers is the EMEA one. Historically in a normal year, its EMEA business generates close to half its EBITDA in Q4, and the company remains confident about Q4 this year as well.

Colliers grabbed all the opportunities the pandemic threw its way. Thanks to a strong balance sheet, it went on an acquisition spree even as its peers hit the pause button or were extremely cautious when it came to inorganic growth. So far in 2020, the company invested $240 million in acquisitions, up from $45 million last year.

What’s next for investors?

Almost 60% of Colliers’ earnings are from resilient, recurring high -quality services. The last quarter has seen a lot of uncertainty normalize with respect to the business environment and in some territories, it has even experienced a strong recovery, which should help Colliers continue to offer good value to its shareholders. Over the past 25 years, the company has delivered a 20% compound annual growth rate in share value.

A key feature about Colliers’ shareholding is that its management owns almost 40% of the equity in the company, which means they remain confident about its long-term potential.

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.

The Motley Fool recommends COLLIERS INTERNATIONAL GROUP INC. Fool contributor Aditya Raghunath has no position in any of the stocks mentioned.

More on Investing

Human Hand Placing A Coin On Increasing Coin Stacks In Front Of House

3 Smart Real Estate Stocks to Buy in August

If you're looking for high dividend income, consider Northwest Healthcare Properties.

Read more »

A worker gives a business presentation.

Where to Invest $5,000 for the Next 5 Years

Are you wondering where you should invest $5,000 for the next five years? Here are three top picks!

Read more »

Bank Stocks

RRSP Investors: Should You Buy TD (TSX:TD) Stock Now?

TD (TSX:TD) stock looks cheap after the big pullback in recent months. Is this the best time to buy TD…

Read more »

Dollar symbol and Canadian flag on keyboard
Stocks for Beginners

New to Investing? 3 Top Stocks Every Canadian Should Own

Safe dividend stocks paying out yields of at least 3% is a low-risk way to invest in stocks. Buying at…

Read more »

Group of industrial workers in a refinery - oil processing equipment and machinery
Energy Stocks

Passive Income: 2 Dividend-Paying Energy Stocks I’d Buy Now and Hold Forever

These two energy stocks can provide an investment portfolio with both passive income and market-beating returns.

Read more »

A gamer uses goggles to play an augmented reality game. tech
Tech Stocks

The Best U.S. Tech Stocks to Buy in August

Tech stocks in the U.S. such as Microsoft and Broadcom have the potential to generate massive wealth for long-term investors.

Read more »

A plant grows from coins.
Dividend Stocks

1 Top Dividend Stock to Buy in August 2022 and Hold Forever

Leon's Furniture (TSX:LNF) stock is one of many quality dividend plays that could face most upside if a recession never…

Read more »

Oil pumps against sunset
Energy Stocks

Oil Falls Below US$90 for 1st Time Since February: 2 Energy Infrastructure Stocks to Buy Today

With oil prices decreasing, energy infrastructure stocks might remain solid bets, even if others see a downturn.

Read more »