STAG - STAG Industrial: Great Business With Double-Digit Total Returns Potential
2024-06-02 07:21:14 ET
Summary
- The industrial property sector will be supported by increasingly favorable supply-demand environment.
- The Company's project pipeline has already started picking up the pace.
- STAG remains undervalued compared to its peers despite its strength in terms of both business and credit metrics.
- There's a potential for double-digit total returns.
Investment thesis
STAG Industrial ( STAG ) has solid business metrics (high occupancy rate and impressive rent escalators), a strong balance sheet with low debt maturities in the upcoming years, as well as an investment pipeline picking up the pace in the increasingly favorable supply-demand environment.
However, it remains heavily undervalued compared to its peers.
Therefore, STAG currently offers a clear path to double-digit total returns resulting from:
- multiple appreciation
- relatively high and well-covered dividend
- rent escalations embedded within its contracts
- further investment activity with the robust project pipeline