Rexford Industrial Realty is an IBD 50 Growth Stock To Watch as shares round out a new base formation, portending potentially strong gains.
The Los Angeles-based real estate investment trust buys, sells and operates industrial properties such as those used for distribution, warehousing and manufacturing. Rexford focuses its operations in Southern California, which its website bills as the nation's largest and most sought-after industrial property market.
The REIT buys both new and used buildings, already occupied or vacant.
Rexford gets about 80% of its revenue from rent. Most of the rest comes from tenant reimbursements.
Earnings Acceleration For Growth Stock To Watch
Funds from operations, REITs' version of earnings, grew at an accelerated pace the past three quarters for Rexford. FFO rose 12% in Q1 2021, followed by gains of 22%, 30% and 32%.
One blotch on this rosy scenario is that analysts expect FFO growth to slow to 9% for Q1 this year and to 15% for all of 2022, according to FactSet.
Rexford ranks No. 2 in IBD's property REIT group, according to Stock Checkup. The group itself sits at No. 54 out of Investor's Business Daily's 197 industry groups ranked by stock price performance. That's a little below a preferred top 40 ranking. But property REITs are up from No. 72 six weeks ago.
Rexford's Stock Price Action
Rexford's stock is carving a cup base, according to MarketSmith chart analysis. The base started on Dec. 31, when it peaked at 81.68. From there shares worked their way down 18% to a bottom of 67.12 on Feb. 24. They then turned higher, with the uptrend taking the stock back above its 50-day moving average by mid-March.
The stock is within 7% of its 81.78 buy point. Watch to see if the rally pauses at this point, with the stock drifting a bit lower for a week or so. That could create a handle on the cup formation and offer an earlier entry point for this growth stock to watch.
Some positive points on Rexford's stock chart:
- Rexford's relative strength line is closing in on a new high even before the stock reaches that mark.
- The REIT's Relative Strength Rating and the Composite Rating are above 90.
- Many of the up days of the rally have been on above-average volume, while most of the few down days have been on below-average volume.
All of these point to recent increasing interest of institutional investors like mutual funds, which can move a stock the way the tides move the ocean. It's always best to swim with the current, not against it. That boosts its allure as a growth stock to watch.
The only other REIT ranked in the top five in Stock Checkup that's also in the IBD 50 is Extra Space Storage. That stock too is shaping a cup base. Its buy point is 228.94.
