👋 Happy Friday, Everyone. Now that you’ve had the chance to read our re-vamped newsletter for a couple of weeks, we’d love to hear which sections you like and don’t like.

Before we dive in: Today's edition is brought to you by Foremost Lithium. The electric vehicle (EV) revolution is no longer just a dot on the horizon. It's here.

EDITOR’S NOTE

Last Friday’s reversal triggered a big follow-through higher for stocks this week. Even the latest Middle-East conflict or strong PPI and CPI data couldn’t deter investors from buying up stocks that were clearly short-term oversold.

📈 Biggest Winners This Week: Data REITs

• Office Properties Income Trust (Nasdaq: OPI) Up 10.86%

• Uniti Group Inc (Nasdaq: UNIT) Up 8.47%

• DigitalBridge Group Inc (NYSE: DBRG) Up 7.04%

• Mfa Financial Inc (NYSE: MFA) Up 6.62%

• Public Storage Operating Co (NYSE: PSA) Up 6.34%

• Digital Realty Trust Inc (NYSE: DLR) Up 6.30%

• Iron Mountain Inc (NYSE: IRM) Up 5.97%

• Geo Group Inc (NYSE: GEO) Up 5.85%

📉 Biggest Losers This Week: Residential and Health REITs were weak

• Apartment Investment and Management Co (NYSE: AIV) Down 9.02%

• Sun Communities Inc (NYSE: SUI) Down 7.63%

• Global Net Lease Inc (Nasdaq: GNL) Down 5.24%

• Americold Realty Trust Inc (NYSE: COLD) Down 4.64%

• Peakstone Realty Trust (NYSE: PKST) Down 4.00%

• Hudson Pacific Properties Inc (NYSE: HPP) Down 3.97%

• National Health Investors Inc (NYSE: NHI) Down 3.96%

• CBL & Associates Properties, Inc. (NYSE: CBL) Down 3.00%

Prices as of October 12, 12:00 Noon

ONE BIG THING

Stocks Bounce!

Briefly: Following another hot jobs report last Friday, stocks sank off the opening bell, but began to reverse around 10:30 AM and bounced significantly higher by the end of the trading day.

What Happened: Friday’s Jobs Report showed that employers added 336,000 jobs report in September, well above the street’s expectations for 170,000. Pre-market futures crashed and the selling was heavy when the market opened. However, once investors got that out of their system, they suddenly realized that the increase in average hourly earnings was only $0.07, or 0.2%. Traders jumped all over that and began buying in a frenzy.

The Dow Jones was down 273 at its worst point, but after the bounce rose over 400 points before pulling back slightly to close up 288 points (0.87%). It was much the same story for the Nasdaq, which sold off sharply in the first trading hour, but reversed course to finish the day up 1.60%.

Fall Out: Was it just the small gain in the hourly wages that triggered the big reversal in sentiment or was it something else? The 10-year treasury pulled back from its highs over 4.80% around the same time. With markets as oversold as they’ve been in months, perhaps investors were looking for an excuse to buy stocks. REITs had a great week with about 90% of them moving higher.

So chalk last Friday up as a reversal day, and that’s often an important technical event as a catalyst for markets to move higher. The Nasdaq poked it’s nose above the 20 day simple moving average (SMA) for the first time since September 15, and the strong buying carried over all the way into Wednesday, even with the fighting between Israel and Hamas weighing on the market. On Wednesday, the Producer Price Index (PPI) came in at 0.5%, above market expectations for 0.3%, but markets shrugged that off as well. Thursday, the Consumer Price Index (CPI) came in at 0.4%, 0.1% above market expectations, but Wall Street shrugged. Inflation? So what else is new?

PRESENTED BY FOREMOST LITHIUM

This Company is Helping Develop American Energy Independence

As the world doubles down on its commitment to renewable energy and sustainability, lithium is taking center stage. Fast becoming known as "white gold," this essential element fuels more than just our smartphones. It provides a powerful backbone to electric vehicles, renewable energy storage, and various other green technologies.

As we move toward a more sustainable future, the demand for ethical and efficient lithium production will likely accelerate significantly. Within this burgeoning industry, Foremost Lithium Resource & Technology (CSE: FAT) is among those uniquely positioned to take advantage of both market demands and the evolving regulatory landscape.

Foremost Lithium's activities and objectives offer a case study of the role proactive industry engagement plays in long-term growth potential. Click here to keep reading.

UPGRADES AND DOWNGRADES:

Sabra Health Care REIT Inc (Nasdaq: SBRA) October 10, Bank of America Securities analyst Joshua Dennerlein upgraded Sabra Health Care from Neutral to Buy.

Omega Healthcare Investors Inc (NYSE: OHI) October 10, Bank of America Securities analyst Joshua Dennerlein upgraded Omega Healthcare Investors from Neutral to Buy and announced a $36 price target.

Healthcare Realty Trust Inc (NYSE: HR) October 12, JP Morgan analyst, Michael Mueller upgraded Healthcare Realty Trust (NYSE: HR) from Neutral to Overweight and announced a $19 price target.

Tanger Factor Outlet Centers Inc (NYSE: SKT) October 12, JP Morgan analyst, Michael Mueller upgraded Healthcare Realty Trust (NYSE: HR) from Underweight to Neutral and raised the price target from $24 to $25.

Starwood Property Trust Inc (NYSE: STWD) October 10, Keefe, Bruyette & Woods analyst Jade Rahmani downgraded Starwood Property Trust from Outperform to Market Perform and lowered the price target from $21 to $20.

Realty Income Corp (NYSE: O) October 10, Bank of America Securities analyst Joshua Dennerlein downgraded Realty Income from Buy to Neutral and announced a $52 price target.

Spirit Realty Capital Inc (NYSE: SRC) October 10, Bank of America Securities analyst Joshua Dennerlein downgraded Spirit Realty from Neutral to Underperform.

Netstreit Corp (NYSE: NTST) October 10, Bank of America Securities analyst Joshua Dennerlein downgraded Netstreit from Neutral to Underperform and cut the price target from $20 to $15. October 12, Keybanc analyst Todd Thomas downgraded Netstreit from Sector Weight to Underweight and announced a $13 price target.

Welltower Inc (NYSE: WELL) October 12, JP Morgan analyst Michael Mueller downgraded Welltower from Overweight to Neutral and announced a $90 price target.

First Industrial Realty Trust Inc (NYSE: FR) October 12, Keybanc analyst Todd Thomas downgraded First Industrial Realty Trust from Sector Weight to Underweight and announced a $42 price target.

REIT ROUND-UP

One Liberty Properties, Inc. (NYSE: OLP) October 6, announced its Board has approved a share repurchase plan for up to $10 million of common stock.

SL Green Realty Corp (NYSE: SLG) October 10, announced that its President, Andrew Mathias, will be leaving the company at the end of his current employment agreement on December 31, 2023. No successor was announced.

Terreno Realty Corp (NYSE: TRNO) October 11, announced it had acquired a property in Rodando Beach, CA for $45.7 million. October 12, Terreno Realty also announced it has acquired an industrial property in Brooklyn, NY for $27.5 million.

Sun Communities Inc (NYSE: SUI) October 12, announced it has sold 41.8 million shares in Ingenia Communities Group, an Australian operator of senior manufactured housing communities, for a minimum net proceeds of $100 million.

HOUSING NEWS BRIEF

A large percentage of Gen Z and Millennials are saying they’ve given up on the American Dream, due to the present state of the housing market. They say they either can’t afford it or flatly state they never want to own a home.

Statista Research Department, in a 2022 survey, found that 12% of women and 18% of men aged 25 to 34 were still living with their parents. About 48% of Millennials do not own a home. The two biggest reasons given are high-interest rates and expensive home prices. The reinstatement of student loan debt may also hinder saving for down payments or make it tougher to qualify for a loan.

Some Gen Z and Millennials say they never want to own a home because they like having the freedom to travel or move at any time. But that assertion could simply be a way to save face because they have low credit scores, high debt-to-income ratios, or lack the funds to purchase a home with today’s costs. Many are simply disillusioned and have given up prematurely.

Yes, it’s tougher now, but even with these obstacles, several ways remain for people to buy their first home. Granted, it will take some flexibility and some sacrifices, but here’s how it can still be done:

Buy a home in a state where prices are lower. 

• Problem: The typical home price in California is $760,526, and $607,771 in Massachusetts. Other states like New York, New Jersey, Colorado and Washington State are also quite unaffordable for younger generations.

• Solutions: For less than $200,000, you can still buy a home in West Virginia, Kentucky, Mississippi, Oklahoma or Arkansas. Eight other states have typical homes priced between $200,000-$250,000. Anyone who works from home can probably live anywhere in the U.S., and those who work for a large company that requires on-site work may be able to request a transfer to a less expensive area.

Buy a home with no money down.

• Problem: Many people don’t have enough for down payments, which can run 3.5% of the sales price or more.

• Solutions: If you or a spouse are now or were in the Military you’re eligible for a zero down VA loan. While this increases the monthly cost, it’s the down payment that is harder for most. Non-Military? Check out zero down U.S. Department of Agriculture (USDA) loans which don’t require Military backgrounds. USDA loans are only available for areas with fewer than 50,000 residents and that typically means a rural town.

Ask for closing cost concessions.

• Problem: You have the down payment, but lack money for closing costs.

• Solution: Offer full price, but ask the seller to pay all or part of your closing costs. With homes not selling quickly, sellers may be more flexible, just don’t expect to receive closing cost concessions and a lower price too.

Handyman Special

• Problem: Homes are too expensive.

• Solution: Look for a less expensive property needing repairs and improvements, or one where a seller has discounted the price for a quick sale. Estate sales where the heirs don’t want the house or foreclosures are some examples. FHA or VA lenders may not approve a home in abject disrepair, so a conventional loan works best. Also, make sure your contract allows you to rescind the offer with a return of your binder deposit if a qualified home inspector finds too many serious issues that could bankrupt you.

Find Organizational Help.

• Problem: No money for down payment and closing costs.

• Solution: Look for local programs that provide help to first-time home buyers. One such national organization is NACA (NACA.com), which provides mortgages with no down payment, no closing costs or fees, no mortgage insurance and presently has a 30-year fixed mortgage below market rates at 7.25%.

Of course, there are always challenges like not wanting to leave friends and family to move six states away. But for those fed up with renting and willing to make sacrifices or put in some extra effort, buying an affordable home is still achievable.

ONE FOR THE ROAD

Realty Income Downgraded: Seriously?!

Who? On Tuesday, October 10, Bank of America Securities analyst Joshua Dennerlein downgraded Realty Income from Buy to Neutral and announced a $52 price target.

WHY? Dennerlein, in a note to clients, wrote, “The rapid cost of capital adjustment for net lease REITs presents a significant headwind in 2024 in our view.” Analysts lately have been assuming slower growth from triple-net REITs amidst ongoing challenges with high interest rates for acquiring properties and paying down debts.

What? Realty Income is a triple-net diversified REIT with 13,100 properties across the U.S. and Europe. It's an S&P 500 company and one of the most popular REITs among investors. Realty Income’s monthly dividend of $0.256 has been paid for 640 consecutive months over 54 years and increased that dividend 104 consecutive months and 122 times overall since going public in 1994. It’s one of the few REITs that increased its dividend in 2020 when COVID-19 had many other REITs suspending or cutting their dividends.

Realty Income was a $70 stock a year ago and closed on Monday at $50.55. It’s 5-year 4.34% average dividend yield was up to 6.0% prior to the downgrade. The dividend is well covered with a 74% payout ratio. It recently diversified even more by entering into an agreement with Blackstone to purchase 1 21.9% interest in The Bellagio Resort in Las Vegas.

Realty Income’s tenants are top quality companies and many are investment grade. No single tenant has more than 3.8% of Realty Income’s annualized contractual rent. It’s second quarter occupancy rate was 99.0%.

The Takeaway: Realty Income has had earnings growth in 26 of the last 27 years, with a median AFFO growth rate of 5% annually, but analyst Dennerlein believes Realty Income may have difficulty growing its earnings next year.

After the downgrade, Realty Income’s share price fell to $49.18, but bounced back to finish the day at $50.20, down 0.69%.

Clearly, there are some investors who see the present value in Realty Income, even if analysts are too timid to see it. Why downgrade one of the best REITs in the world from Buy to Neutral after a 28% decline? If you don’t advise investors to buy great stocks when they’re beaten down and yields are high, how will they ever have the potential to make large gains over the long term?

PRESENTED BY FOREMOST LITHIUM

This Company is Helping Develop American Energy Independence

As the world doubles down on its commitment to renewable energy and sustainability, lithium is taking center stage. Fast becoming known as "white gold," this essential element fuels more than just our smartphones. It provides a powerful backbone to electric vehicles, renewable energy storage, and various other green technologies.

As we move toward a more sustainable future, the demand for ethical and efficient lithium production will likely accelerate significantly. Within this burgeoning industry, Foremost Lithium Resource & Technology (CSE: FAT) is among those uniquely positioned to take advantage of both market demands and the evolving regulatory landscape.

Foremost Lithium's activities and objectives offer a case study of the role proactive industry engagement plays in long-term growth potential. Click here to keep reading.