BAM’s Key Details:
- CNBC’s Jim Cramer announced his three real estate picks for 2023
- Tech and real estate stocks have been among the worst sectors of the S&P 500 this year, and if Cramer is right, the struggle will continue in 2023
CNBC’s Jim Cramer announced his real estate stock picks for 2023.
Tech and real estate stocks have taken a beating this year on the S&P 500, and Cramer believes the struggle will continue, for the most part, at least for the first half of the year.
Tech stocks, particularly the ones he recommends, may see their values rally in the second half. As for real estate stocks, some will do better than others.
Here’s what you need to know to make smart stock investments in the coming year.
2022 has been rough for tech and real estate stocks
In a recent CNBC article, Cramer highlighted three tech stocks and three real estate stocks he believes could see an upswing in stock values in 2023—after a discouraging year for both sectors.
The only sectors that fared worse than tech and real estate this year are consumer discretionary (down 36.2%) and communication services (down 40.3%).
The tech and real estate industries had to contend with rising interest rates this year. The information technology sector is down 27% compared to a year ago, as of closing on Wednesday, December 21st. Real estate has seen a 28.4% drop over the same period.
Cramer sees a continuing struggle for both sectors in at least the first half of 2022, with tech stocks possibly rallying in the second half.
For his tech picks, Cramer is favoring Oracle (ORCL), Broadcom (AVGO), and Palo Alto Networks (PANW).
Cramer’s real estate stock picks for 2023
Cramer focused on three real estate stocks for 2023: Realty Income (O), Federal Realty (FRT), and Prologis (PLD).
While it will likely be a challenging year for the real estate sector, these three picks have factors working in their favor. Below, we break down what Cramer likes about each —and why he anticipates they will have a stronger year than most.
Realty Income (O)
Cramer’s first pick is Realty Income.
He likes this stock because of the company’s top commercial tenants:
- Dollar General
- Walgreens
- 7-Eleven
- Dollar Tree
- FedEx
These businesses are all likely to hold up well during a potential recession.
Best of all, this company’s a dividend machine; they pay a monthly dividend—people love to get a monthly distribution—and tend to raise it multiple times a year. Currently, the stock yields 4.6%. I really like this one.
Source: Google Finance (as of Dec 27, 2022)
Federal Realty (FRT)
Next on the list is Federal Realty (FRT). While shares of this stock have dropped 25% in 2022, Cramer sees it as a solid long-term investment, with a current dividend yield of 4.25%.
Federal Realty specializes in mixed-use properties—both residential office space and retail. Its key advantage is location: most of its properties are in high-end neighborhoods. That advantage offers some insulation from any weakness in the economy.
Source: Google Finance (as of Dec 27, 2022)
Prologis (PLD)
Cramer’s third recommendation is the logistics-focused real estate investment trust (REIT) Prologis (PLD), which he credits with continuing to yield strong results even as its stock value has fallen roughly 31% compared to a year ago.
Given its history, Cramer believes Prologis shares have fallen far enough to make it enticing.
Source: Google Finance (as of Dec 27, 2022)
Top takeaways for real estate agents
If you’re working on building a recession-proof stock portfolio, Cramer’s recommendations could be a place to get started.
For a quick recap, Cramer is favoring—
- Realty Income (O)—because its commercial tenants will do particularly well with inflation driving more people to save money
- Federal Realty (FRT)—because the location of its properties provides insulation from recession
- Prologis (PLD)—which continues to yield strong results and whose stock values have dropped low enough to make a nice ROI more likely
