Most of you know that my REIT picks aren’t meant to generate extraordinary returns. I am most focused on principal preservation and modest price appreciation. Over time, I have found that owning shares in reliable dividend growers produces the most favorable returns without taking excessive risk.
A "value trap" is when a stock is cheap and it trades at a low multiple for an extended time. The stock "traps" attract investors who are looking for a bargain because the shares look inexpensive. The "trap" springs when investors buy into the company at low prices and the stock price never rebounds
Today the market sent shock-waves across the retail sector after Amazon (AMZN) and Whole Foods Market, Inc. (WFM) announced they had entered into a definitive merger agreement under which Amazon will acquire Whole Foods for $42 per share in an all-cash deal valued at $13.7 billion.
When I select REITs for the High Alpha REIT portfolio, I am essentially looking for companies that have the widest margin of safety, and that I believe have the best possibility for outsized share price appreciation. Sir John Templeton sums up the margin of safety as follows: