January 11, 2010

Buying more REITs in UpDown

Practice invest

This article is about pretend investing that I do in the online site Updown.   I'm documenting my stock picking choices so that in the future I can look back and learn from my mistakes and successes.

I've been sitting on a pile of cash in Updown from stuff I've sold.    I've seen some of my REIT purchases go up quite a ways and I just sold off half my HPT to cash in profits.   So I figured I should go looking for some new good REITs to buy.

I ran a filter in the stock screener at Yahoo starting with just any REIT with a yield > 5%.    From there I examined the financials of REITs with attractive yields to see if any were good value.   I crossed off any REITs that seemed to be having troubles or otherwise on a downward path.   If I was interested after checking out their basic stats and finances I then skimmed through the last annual report.   After eliminating a few less attractive REITs I ended up with a couple REITs that I thought would be worth buying.  

Heres some detail on the two REITS and what I liked and didn't like about them:

Getty Realty Corp. (GTY) -   Getty owns and leases gas station and convenience store property.   The REIT was created as a spin off of the real estate assets of a gas station owner.   That company is called Getty Petroleum Marketing which is now Getty Realty's primary customer.  They are paying a dividend of 8.2%.   They have consistent revenue and profits with good funds from operations.   Their debt doesn't mature until 2011.   Pros:  Fairly safe business that is generally recession proof, good financials and low debt risk.  Con: Rely heavily on one customer Getty Petroleum Marketing.  2008 Annual Report.   Current Price: $23.09 Target : $26.50

Medical Properties Trust Inc. (MPW)  - As their name implies Medical Properties Trust owns hospitals.  Their financials are pretty solid.   Right now the yield is 7.7%.   They don't have significant debt due until 2011.    Pros:   Relatively safe sector.  Con: Not much upside, high executive pay.  2008 Annual Report   Current price: $10.28  Target $12.

Note the current prices listed are from a few days ago since I'm writing this after I did the initial research.

I bought both REITs in Updown then put in some sell limit orders to sell 50% of my stake if they hit my target prices.

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