The real estate sector has been one of the best-performing parts of the stock market so far in 2021, but some real estate stocks are looking extremely attractive as we head into May. Here are three in particular that look like compelling values right now that investors might want to put on their watch list.
The market seems confused -- take advantage
Boston Omaha (NASDAQ: BOMN) is a stock the market just can't seem to figure out. From September through mid-February, the stock more than tripled on very little news. Recently, Boston Omaha has been cut in half from the highs, also on no significant news.
To be sure, there are some decent explanations. For one thing, Boston Omaha sponsors a special purpose acquisition company (SPAC) called Yellowstone Acquisition (NASDAQ: YSAC), and was therefore caught up in the "SPAC boom" earlier this year. Virtually every stock that has had anything to do with SPACs has fallen dramatically from the highs.
Elsewhere in the company, however, things are looking rather strong. The billboard and insurance businesses reported strong 2020 results, especially considering the pandemic's disruptive effects. The rural broadband business Boston Omaha is focused on is ramping up nicely. And its investment in homebuilder Dream Finders Homes (NYSE: DFH) has performed great since its IPO and is now worth more than $100 million all by itself.
Boston Omaha is an ultra-long-term play, aiming to build a wealth-building conglomerate from the ground up. Now that it's fallen a bit, it could be worth a closer look.
Things could get very interesting for this company
I've discussed Howard Hughes Corporation (NYSE: HHC) several times due to the unique nature of its master-planned communities business model. And while the pandemic hasn't exactly been kind to Howard Hughes or its investors, I think the next few years could be very different.
For one thing, real estate demand is already through the roof. A combination of low interest rates, low housing inventories, and high consumer demand has pushed home prices higher and higher each month. At its core, Howard Hughes sells land to real estate developers and already has the advantage of being able to control supply in its city-sized communities. Ultra-strong housing demand could make this a very profitable time for Howard Hughes' land sales business.
On the commercial development side of the business, Howard Hughes obviously sees some big opportunities. The company recently announced it's accelerating plans for about 2 million square feet of development, including several multifamily residential properties. It's currently in the planning stages for a large mixed-use building in Manhattan. And it recently announced an agreement with the city of Alexandria, Virginia, to advance the redevelopment of its Landmark Mall property into a premier 4 million-square-foot mixed-use property.
Howard Hughes still trades for about 16% less than where it started 2020, and now could be a great time to buy shares, with some exciting value-creation catalysts on the horizon.
Travel demand is off the charts -- get in before big events start again
To put it mildly, travel demand is making a huge comeback as restrictions ease and more Americans get vaccinated. Hotel occupancy in areas like beaches and national parks are above pre-COVID levels in many cases, and travelers are willing to spend more on accommodations as the year goes on. And there's a major shortage of rental cars throughout the U.S., an unfortunate by-product of soaring demand.
However, group travel -- things like conferences and conventions -- hasn't really made much of a comeback yet. But it will. And that's why Ryman Hospitality Properties (NYSE: RHP) could be worth a look.
The group-focused hotel operator reported rebooking 1.34 million cancelled room nights, and that group room nights on the books for the second half of 2021 is healthy and "set up for recovery." With shares still well below pre-COVID highs, Ryman could be a great stock to buy before large gatherings start to make their comeback.
The Millionacres bottom line
To be perfectly clear, I think all three of these look compelling at their current prices, and all three have excellent growth potential. But the path forward isn't likely to be a perfectly smooth one, so these are best suited for long-term investors who can ride out some ups and downs along the way.