{"id":92700,"date":"2016-07-11T07:12:41","date_gmt":"2016-07-11T11:12:41","guid":{"rendered":"http:\/\/countingpips.com\/?p=92700"},"modified":"2016-07-11T07:12:41","modified_gmt":"2016-07-11T11:12:41","slug":"thanks-to-brexit-this-sector-is-making-a-huge-comeback","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2016\/07\/thanks-to-brexit-this-sector-is-making-a-huge-comeback\/","title":{"rendered":"Thanks to Brexit, This Sector is Making a HUGE Comeback"},"content":{"rendered":"
July 11, 2016<\/div>
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By WallStreetDaily.com<\/u><\/a> \"Thanks<\/p>\n

It\u2019s been just over two weeks since the EU referendum vote, and investors are still dumping stocks as fast as their fingers can sell them.<\/p>\n

Since the vote, the S&P 500 Index has declined 1%. But spot gold is up 9%, and the iShares 20+ Year Treasury Bond ETF<\/strong> (TLT<\/a>) has added another 8% over the same period. In fact, TLT is now trading at an all-time high as fear grips the masses.<\/p>\n

But the full-blown disruption of the market has created a huge<\/em> opportunity in a segment where few people are looking right now\u2026<\/p>\n

Cruising in the Slow Lane<\/h2>\n

Before the pivotal referendum vote, the financial sector was on fire with the prospect of rising interest rates.<\/p>\n

From its February bottom, the S&P 500 financial sector, outperformed the market for three consecutive months. Financials gained as much as 21% before the vote.<\/p>

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But the UK\u2019s vote to leave the European Union took much of the market by surprise.<\/p>\n

And now, the Fed will likely hit the brakes on rate hikes for the rest of the year.<\/p>\n

The odds of a hike at any point this year are now less than 10%.<\/p>\n

As you may know, banks\u2019 profits \u2013 and their stock prices \u2013 have lagged behind the broader market during the near-zero interest rate era (ZIRP).<\/p>\n

And the prospect of low rates for longer, will continue to weigh heavily on the already-battered sector.<\/p>\n

However, low rates do favor one crucial segment of the financial stock universe\u2026<\/p>\n

Low Rates, High Profits<\/h2>\n

Real-estate investment trusts \u2013 or REITS \u2013 benefit greatly from low rates.<\/p>\n

As you know, these companies buy up revenue-generating real estate, often using leverage.<\/p>\n

When rates are low, REITs make out like bandits taking advantage of cheap financing. And they can afford to reward shareholders with fat dividend payouts.<\/p>\n

Since the start of the bull market, the Dow Jones U.S. Select REIT Total Return Index (INDEXDJX:DWRTF) has soared 479%. That\u2019s more than twice the total return of the Dow Jones Industrial Average.<\/p>\n

The caveat to this market segment is that it is sensitive to even the suggestion <\/em>of rate hikes.<\/p>\n

But thanks to Brexit, we may not see another interest rate hike for the next twelve months \u2013 or more!<\/p>\n

This makes the current pullback the perfect opportunity to dive into the sector. And I\u2019ve got just the name to get you started\u2026<\/p>\n

The Diamond in the Rough<\/h2>\n

DiamondRock Hospitality Co.<\/strong> (DRH<\/a>) is a lodging-focused real-estate investment trust.<\/p>\n

Founded in 2004 with headquarters in Bethesda, Maryland, the company owns approximately 30 hotels and resorts in North America, with a total of nearly 11,000 guest rooms.<\/p>\n

Its properties are managed by some of the biggest names in the hospitality business: Marriot International Inc.<\/strong> (MAR<\/a>), Starwood Hotels & Resorts Worldwide Inc.<\/strong> (HOT<\/a>), and Hilton Worldwide Holdings<\/strong> (HLT<\/a>).<\/p>\n

The company reported third-quarter financials on July 7 that exceeded Wall Street earnings estimates by a whopping 68%.<\/p>\n

Over the last five years, the company has increased funds from operations by 21% \u2013 twice the median of its peers. And it currently sports a 5.5% yield \u2013 more than twice the S&P 500\u2019s 2.54% yield, and four times the yield of the US 10-year treasury bonds.<\/p>\n

On a forward earnings basis, shares are trading at a 52% discount to their 10-year average.<\/p>\n

Most importantly, the company is shielded from the chaos unfolding overseas.<\/p>\n

As I noted last week, post-Brexit currency fluctuations will wreak havoc on international revenue through the end of the year.<\/p>\n

But the overwhelming majority of American small-cap companies book their revenue here in the US.<\/p>\n

DiamondRock, which sports a market cap of $1.8 billion, is well-insulated from these effects. All of its revenue, which has grown at an average clip of 12% over the last five years, is generated in the US or its territories.<\/p>\n

Best of all, its shares are moving in an ascending triangle pattern \u2013 which often precedes a breakout.<\/p>\n

Despite rocky trade over the last few weeks, shares have stayed on their seven-month uptrend channel.<\/p>\n

Bottom line: With rates low and international fears high, domestically-focused REITs are one of the market\u2019s juiciest opportunities right now.<\/p>\n

Consider adding this high-income \u201crock\u201d to your portfolio while it\u2019s still cheap.<\/p>\n

On the hunt,<\/p>\n

Jonathan Rodriguez<\/p>\n

The post Thanks to Brexit, This Sector is Making a HUGE Comeback<\/a> appeared first on Wall Street Daily<\/a>.<\/p>\n

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 <\/p>\n","protected":false},"excerpt":{"rendered":"

By WallStreetDaily.com It\u2019s been just over two weeks since the EU referendum vote, and investors are still dumping stocks as fast as their fingers can sell them. Since the vote, the S&P 500 Index has declined 1%. But spot gold is up 9%, and the iShares 20+ Year Treasury Bond ETF (TLT) has added another […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-92700","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/92700","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=92700"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/92700\/revisions"}],"predecessor-version":[{"id":92716,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/92700\/revisions\/92716"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=92700"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=92700"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=92700"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}