2 Real Estate Stocks Flashing 'Buy'

WPG could soon start squeezing shorts

Managing Editor
Aug 31, 2018 at 12:10 PM
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Shares of real estate investment trusts (REIT) Washington Prime Group Inc (NYSE:WPG) and Apartment Investment and Management Co (NYSE:AIV) have both been quietly climbing out of their early 2018 holes. There is reason to believe their recent rallies could resume, as both stocks recently flashed short-term bullish signals heading into the new month.

WPG Pullback Could Be Buying Opportunity

Looking at Washington Prime Group, the stock was furiously rallying off its mid-February lows of $5.40, peaking at $8.43 on July 6. Since then, the shares have pulled back, and are now trading around their 80-day moving average -- which could have bullish implications, if history is any guide.

Daily Stock Chart WPG

More specifically, WPG shares are now within one standard deviation of their 80-day moving average, after a lengthy stretch above this trendline. There have been four similar signals of this kind in the past three years, after which WPG went on to average a one-month gain of 6.3%, with three of those returns positive, per Schaeffer's Senior Quantitative Analyst Rocky White. At last check, the stock was up 0.9% to trade at $7.65. A similar rally from current levels would place the REIT stock back above the $8 level.

A short squeeze could also help drive the shares higher. Short interest increased by 11% in the most recent reporting period, to a record high 32.91 million shares. This represents nearly 18% of WPG's total available float, and more than 16 days of pent-up buying power. 

AIV Stock Eyes Longest Monthly Win Streak in 4 Years

As for AIV, the REIT stock is fractionally lower today at $43.73, despite heading toward a four-month winning streak -- its longest since 2014 . The shares have added 15% since their February bottom near $38, with their 50-day moving average containing pullbacks in June and July. While all of this amounts to the stock barely trading above its year-to-date breakeven, there is plenty to suggest the stock could keep climbing in September.

Daily Stock Chart AIV

To start, the real estate name is one of the best S&P 500 stocks to own ahead of the shortened Labor Day week. According to White, in the past 10 years, the equity boasts an average return of 2.1% during this holiday week, and was positive nine times -- the highest holiday-week win rate of the stocks covered. 

There is ample room for bullish analyst notes, should AIV keep climbing. Of the 12 brokerages covering the equity, eight rate it a tepid "hold." Furthermore, its consensus 12-month price target of $45.33 is only slightly above its current perch.

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