#8 - Douglas Emmett (NYSE:DEI)
Douglas Emmett (NYSE: DEI) - Like Kilroy Realty, Douglas Emmett is a Real Estate Investment Trust (REIT) that is already sensitive to rising yields caused by interest rate hikes. The stock saw a pop in the first quarter, and its year-over-year growth has exceeded its strong five-year average growth as well as the performance of the industry as a whole. However, current events are showing that the company’s growth may be slowing. Recently its shares are falling on hard times, dipping below key technical indicators. DEI dipped below its 50-day moving average and was unable to reclaim that position. More concerning in the short term, the stock is at risk of falling below its 200-day moving average. Both of these would suggest that the stock may be trying to find a floor. Either way, the stock is trading far below its February highs. The stock is considered overvalued compared to the industry both in terms of the value of assets and past earnings
About Douglas Emmett
Douglas Emmett, Inc (DEI) is a fully integrated, self-administered and self-managed real estate investment trust (REIT), and one of the largest owners and operators of high-quality office and multifamily properties located in the premier coastal submarkets of Los Angeles and Honolulu. Douglas Emmett focuses on owning and acquiring a substantial share of top-tier office properties and premier multifamily communities in neighborhoods that possess significant supply constraints, high-end executive housing and key lifestyle amenities.
- Current Price
- $18.08
- Consensus Rating
- Hold
- Ratings Breakdown
- 2 Buy Ratings, 5 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $17.43 (3.6% Downside)
Companies are affected by rising interest rates because it increases their cost of borrowing from banks. Not only does this mean they may curb spending, but it also means they will pay a higher rate of interest on the money they do borrow. Slower growth can have a trickle-down effect on earnings, which can have a negative effect on stock prices.
One sector that tends to benefit from rising interest rates is the financial industry because as interest rates rise, they can charge more for lending. However, there are several other industries that show sensitivity to rising interest rates. These include energy companies that typically rely on borrowing to upgrade and maintain infrastructure, utilities who see investors flee from the security of a stable dividend for stocks with higher growth opportunity, also the real estate industry and companies that rely on real estate development for their growth such as construction and machinery can also be affected by rising interest rates.
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