MPW - Medical Properties Trust Inc - US Housing Market Stocks Analysis

Companies / US Housing Mar 21, 2023 - 02:38 AM GMT

US House Prices Current State

My interim view as of early July 2022 based mainly on my stock market, economy and UK housing market analysis at the time (Stocks Bear Market Rally Last Gasp Before Earnings Season, US House Prices 3 Year Probability Range) concluded in an rough expectation for US house prices to target a gain of between 20% and 30% over the next 3 years that would be punctuated by a correction during 2023.

The latest Case Shiller 10 city index for November 2022 is 313, down form a peak of 330 in June 2022 (remember there is a 2 month lag in reporting of data). Thus US house prices have corrected by 5% from their highs though still positive on an 12 month basis at +6.3% which isn't anywhere near the shrill cries of the doom merchants such as Michael Burry of Mid 2022.

And given the background of soaring mortgage interest rates and contracting corporate earnings coupled with the inflationary cost of living crisis then +6.4% over the past 12 months is a sign of relative strength that suggests that yes US house prices whilst weak during 2023 are not going to fall off a cliff as many prospective buyers hope they will, after all the so called recession saw the US economy add 517,000 jobs last month, more than double market expectations! Thus the correction looks set to mild and prove temporary with prices set to resume their bull and likely to trade at new all time highs during 2024.

US Housing Stocks Mini Portfolio

Where housing stocks are concerned the more bad news the better which is the mistake most investors make when seeking good news to buy, countless times I get asked why am I buying x,y,z, stock when the news is so bad! We'll how else do you think you are going to get the stocks to trade down to a cheap prices? Not when the news is GOOD! You want the news to be BAD, DIRE, disastrous even because that is when one gets the greatest buying opps! It's why during October I looked like a porcupine given all the falling knives that I had tried to catch, which included a few US housing stocks though to very limited extent, pinprick exposures so as to get give me some skin in the game towards focusing on the US housing market.

MPW - Medical Properties Trust Inc

Owns medical properties such as hospitals so exposed to the US housing market and healthcare sector that currently yields 9%!. Like most REITS it's not a capital grower, it's a dividend income stock. However it does range trade between $24 and $10, where most recent price action has seen the stock price bounce off it's low, so another stock trading at an opportune time which has now made a higher low low and higher high and broken it's downtrend line, so as far as I am concerned the bottom is in so all that remains is to climb on board this range trading gravy train before it fully choo choo's out of the station. The stock is currently correcting it's breakout which could end at any time, It is IN it's buying range of $13.1 down to $11.1, I suspect those who get greedy will be left sat on the bench at the station. Yes, for the time being upside IS limited to $24. However add the eye watering 9% dividend to that and well this as good as it gets in terms of risk vs reward, just invest and forget until $24 whilst collecting the 9% annual dividend at it's current price of $12,8.

The bottom line this was already on my buy the falling knives radar as a range trading stock so I am already invested, and will buy more on the dip, that should result in a yield of at least 10% per annum coupled with the potential to X2.

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By Nadeem Walayat

http://www.marketoracle.co.uk

Nadeem Walayat has over 30 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

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