Shopping mall stocks have been out of favor for several years now due to the competitive pressure created by the boom in online shopping. Kimco Realty (NYSE: KIM) is no exception to this trend.
Kimco's stock is still down more than 40% from the highs it achieved in 2016. However, the company has executed a strategy of focusing on neighborhood shopping centers anchored by grocery stores, which are less likely to be impacted by competition from online shopping. Kimco's strategy and fundamentals appear sound. So are investors throwing out the baby with the bathwater?
Kimco is a real estate investment trust (REIT) focused on managing neighborhood shopping centers. The company's strategic focus is to own real estate centered on people's live/work/play environments. What this translates to is a real estate portfolio consisting of open-air malls typically anchored by grocery stores and commonly featuring off-price retailers, home-improvement stores, and gyms. These real estate assets aren't strip malls, but they also aren't Class A luxury shopping malls.