Real estate and banks are going to do extremely well over the next several months and years. The money that was printed by the Federal Reserve and other central bankers is going to make its way into world-wide prices. Assets are going to be inflated to very high levels. Here is a company that is positioned to take advantage of that economic move.
British Land Company is a real estate company that either owns, develops or manages commercial properties in the United Kingdom and, more specifically, around London. Generally, it is a REIT, Real Estate Investment Trust. The current price of the stock is $7.52 per share and the market capitalization is $7.5 billion. Please note, despite this being a primarily British company, all numbers are stated in dollars.
I have been extremely bullish on two separate sectors over the past six months, that being financial (specifically banks) and real estate. Both of these two industries are well positioned to move upward quickly with the coming economic moves. But, the later will take a bit more time. Real estate will see increases more and more from price increases via inflation.
This company, when you look at their financial records, is increasing its assets and revenue in a consistent, methodical way. There were very large increases to its portfolio purchases and assets under management in 2012 going into 2013. The earnings show the increases, and so do the earnings per share.
Here are the assets versus liabilities over the past several years:
2012: $12,567 / $3,924
2013: $17,965 / $6,103
2014: $19,261 / $6,572
2015: $19,931 / $6,111
Sure, there is the “Wow, numbers went up” first glance reaction. But, what is interesting about this is the percentages and what they translate as a profitability end-result method. Look at the liabilities from 2013 - 2015. Relatively, the numbers are nearly the same from liabilities over that three year period. But, there was a far greater increase in assets during that time. This shows management is effectively using what it has to increase shareholder value.
But, when you look at gross earnings and earnings per share, you can see how this translates with what potentially may be your long term investment,. Respectively, here are gross earnings and earnings per share for the same years:
2012: $468 / $0.50
2013: $549 / $1.77
2014: $645 / $2.71
2015: $706 / $1.97
Management is effective at creating significant increases with cash and cash flow without any detrimental impact on earnings per share. But, and this is what gets me the most, the earnings-per-share is astronomical. Earnings of about $1.97 should be trading at $20 per share. However, this stock is trading at $7.52 per share.
This is the beauties of investing in sectors that really got hammered from the financial meltdown in 2008. No one even thinks about considering these stocks as potential additions into their portfolio. And, that is why I love these sectors.
From an economic standpoint, the Federal Reserve and the Bank or England, as well as nearly every other major central bank around the world, have printed up massive amounts of money to get their economies rolling. All that printing is going to turn into inflation once the economy starts moving forward. We are already seeing that being printed in the inflation data as of late. That will then turn into asset prices moving upward. Keep in mind the trillions of dollars that were invented from thin air over the past few years and have yet to be seen in the inflation numbers. Despite increases so far in CPI data, the economy is a long way from seeing its full potential of asset price increases.
BTLCY is already a great company to consider for your portfolio. Factor in the potential with real estate prices and economic growth and this stock could easily be trading at $30 by the end of the year. That kind of wealth creation does not happen too often. Add this to your portfolio as soon as you can and hold on.
|This headline from Macroaxis disseminated on 01/26/2017 added to the next day price reduction.The overall trading delta to closing price of the next trading day was 1.07% . The overall trading delta when the story was published to current closing price is 3.87% .|