Easing inflationary pressures and falling interest rates have triggered a strong rally in the TSX Composite this year. The Canadian market benchmark has jumped by over 21% year to date and currently trades close to the 25,400 level.
While much of the market’s focus has been on technology and industrial stocks, the real estate sector could also present some attractive opportunities for long-term investors right now. As inflation continues to ease and borrowing costs decline in 2024, real estate stocks could stage a sharp recovery from the challenges of high interest rates seen in recent years.
In this article, I’ll highlight two no-brainer Canadian real estate stocks you can buy for less than $1,000 today and expect solid returns on investments in the long run.
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Colliers International stock
While Colliers International Group (TSX: CIGI) isn’t a traditional real estate investment trust (REIT), it’s one of the top players in the global commercial real estate services industry. This Canadian firm mainly generates revenue by providing services like property sales, leasing, valuation, and workplace consulting. With a market cap of $10.1 billion, CIGI stock currently trades at $200.91 per share after rallying by around 38% over the last year.
In the third quarter, Colliers posted an 11.7% YoY (year-over-year) increase in its total revenue to US$1.2 billion with the help of strong performance across all service lines. Similarly, the company’s adjusted quarterly earnings climbed by 10.9% from a year ago to US$1.32 per share as it continued to focus on cost management and operational efficiencies.
Colliers recently acquired the Canadian professional engineering services firm Englobe, which is likely to strengthen its project management and consulting services segment. Notably, such strategic acquisitions have been playing a key role in boosting Colliers’s recurring revenue streams, which now account for over 70% of its earnings. With the easing of borrowing costs, this real estate sector-focused firm could benefit from increased transaction volumes and a more favourable real estate market in the coming years.
FirstService stock
FirstService (TSX: FSV) could be another attractive TSX stock to consider right now if you’re looking to gain exposure to the real estate sector without directly investing in property ownership. With a market cap of $12.1 billion, this Canadian firm mainly focuses on property services across North America, including residential and commercial property management, as well as restoration and maintenance services. After rallying by 25% so far in 2024, FSV stock currently trades at $268.05 per share.
In the quarter ended in September 2024, FirstService posted a solid 25% YoY rise in its consolidated revenues to US$1.4 billion with the help of strategic acquisitions and organic growth. More importantly, its adjusted quarterly earnings jumped 30.4% from a year ago to US$1.63 per share, beating analysts’ expectations of US$1.42 per share due to the strong performance of its FirstService Brands segment.
This strong performance highlights FirstService’s ability to drive growth despite a challenging macroeconomic environment. With easing inflation and lower interest rates expected to boost demand for its restoration and property management services, this real estate sector-focused firm could benefit further from favourable economic conditions in the coming years, which should help its share prices rise.
