Federal Realty: Buy at the High?
Federal Realty (NYSE: FRT) shares are near their highest levels of the year, having gained a huge 38% in a little over six months. That's around twice the gain of the S&P 500 Index and 18 percentage points better than the average real estate investment trust (REIT), using the Vanguard Real Estate Index ETF as a proxy. Is this high-flying REIT worth buying?
Federal Realty's shares have, indeed, had a good run in 2021, but they are still 30% below the high water mark set in 2016. The reason why, on both fronts, is basically the same. This real estate investment trust owns retail properties. That was a terrible place to be in pandemic-hit 2020 when the government forced non-essential businesses to close and asked people to avoid each other in an effort to slow the spread of the novel coronavirus. The drop since 2016, meanwhile, has been driven by fears of the retail apocalypse, which is being vastly overblown. Yes, financially weak retailers that haven't kept up with customer trends (including, but not limited to, online shopping) are going bankrupt and/or closing stores. But people continue to shop in physical stores, and good retail locations that draw repeat customers are hard to replace.
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Source Fool.com
