Tritax Big Box (LSE: BBOX), the FTSE 250-listed real estate investment trust (REIT), is hard to miss today. Not only is it the fastest riser among all of the index’s components at the time of writing, up more than 4.5%, the BBOX share price has touched new all-time-highs.
I think it’s easy to chalk it up as yet another real estate play. Property stocks have gained because of encouraging policies, vaccine development and an amicable end to the Brexit negotiations saga.
But BBOX is another story. Here are four reasons why:
#1. Logistics play
It’s not so much a real estate play right now as a logistics one. It so happens that Tritax Big Box focuses on warehousing properties. At a time when we have been ordering online, leading to booming sales of e-tailers like Amazon, demand for storage facilities has been rising too.
This was evident in BBOX’s previous update in October, and I think the uptrend will be further reinforced in the next update later this month.
#2. BBOX shows strong performance
I wouldn’t be keen on it if it looked healthy only because of the current scenario. That’s not the case, however. Even earlier, it was a profit-making company, which adds to its credentials.
#3. Long-term prospects look good
Moreover, I think its long-term prospects also look good. The future of shopping is online, as the challenges faced by brick-and-mortar stores make it evident. But lockdowns and the pandemic have accelerated the shift towards online purchases, perhaps even to a greater degree than would have otherwise been anticipated.
This will impact Tritax Big Box and its peers positively. One example is the FTSE 100 REIT, Segro, which finds itself in a similarly fortunate situation. Its share price, like BBOX, is near its highest ever levels.
#4. Reasonably priced
Its price-to-earnings ratio at 18 times isn’t exactly small, but it doesn’t look like a bubble either. In fact, for a stock that is currently seeing highest ever price levels, it appears quite muted.
A word of caution
The only drawback to the stock is in comparison to Segro, which has a slightly lower price-to-earnings ratio. It also has a more international profile. This means that it’s less vulnerable to any economic fluctuations in the UK.
This is something to remember in 2021, the first year after Brexit. The worst of the corona-crisis is yet to hit the economy, but will become clearer over the year as will any Brexit-related challenges.
However, over time, I would think that BBOX will come out as a winner. This, I would imagine, would be particularly evident during high-growth years for the UK economy, when consumers spend more.
I’d buy it and hold it for the next few years.
Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.
Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.
The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.
But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Manika Premsingh has no position in any of the shares mentioned. The Motley Fool UK has recommended Tritax Big Box REIT. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.