Speculations related to the Fed lift-off decision as well as surveys of spending trends over the Thanksgiving holiday have probably already caught your attention. There are, however, opportunities waiting to be grabbed in other spaces too.
One such stock is CBRE Group Inc. CBG. Notably, shares of this Los Angeles-based commercial real estate services and investment firm gained over 9% year to date, and the stock continues to reflect strength in several areas.
4 Reasons Why CBRE is an Attractive Pick
Acquisitions: CBRE continues to expand into new verticals and regions through strategic in-fill acquisitions as well as large, transformational deals such as that of Norland. In fact, CBRE accomplished 11 in-fill acquisitions in 2014 and 4 in-fill acquisitions in the first nine months of 2015.
More recently, the company announced the acquisition of Forum Analytics, LLC, which would allow it to leverage the latter’s modeling and mapping solutions. Also, in third-quarter 2015, CBRE acquired Global Workplace Solutions, a move that is expected to enhance contribution from its occupier outsourcing business line. As market conditions continue to improve, we believe that opportunistic acquisitions would supplement the company’s organic growth strategy.
Earnings per Share: CBRE posted an earnings surprise of 13.33% in the last reported quarter. The company has delivered positive surprises in three out of trailing four quarters with an average beat of 10.58%.
Its historical EPS growth (3–5 years) of 20.42% is well above the industry average of 4.06%. Moreover, its earnings momentum is expected to continue in the near term as reflected by the company’s projected EPS growth (F1/F0) of 20.54%, compared to the industry average rate of a negative 8.82%. This indicates strong prospects for the company.
Sales Growth: CBRE boasts of five-year historical sales growth of 14.44%. Moreover, its projected sales growth (F1/F0) of 18.43%, as against the industry average growth rate of 0.00%, promises sustained top-line growth.
Currently, CBRE has a sales/asset ratio of 1.23, which means that the company gets $1.23 in sales for each dollar in assets. This is ahead of the industry average of 0.29, which means that CBRE is more efficient than the industry at large.
Earnings Estimate Revisions: Analysts have been raising their estimates for CBRE lately. In fact, in the past 60 days, the Zacks Consensus Estimate for 2015 moved north 7 cents to $2.03, while that for 2016 climbed 6 cents to $2.30.
Conclusion
Considering these positives, we believe that investing in CBRE Group right now will not disappoint you. The company currently has a Zacks Rank #2 (Buy). Moreover, reflecting its solid growth potential, the stock has a Zacks Growth Style Score of ‘B’. According to our style score system, a stock with a favorable Zacks Rank and Zacks Growth Style Score of ‘A’ (or ‘B’) is highly desirable.
Other Stocks to Consider
Top-ranked stocks in the real estate space include Henderson Land Development Co. Ltd. HLDCY, Jones Lang LaSalle Inc. JLL and Reis, Inc. REIS. All three stocks hold a Zacks Rank #2.
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