Is Equinix, Inc. (EQIX) the Best Real Estate Stock to Buy According to Billionaires?

Insider Monkey
31 Mar

We recently published a list of 10 Best Real Estate Stocks to Buy According to Billionaires. In this article, we are going to take a look at where Equinix, Inc. (NASDAQ:EQIX) stands against other best real estate stocks to buy according to billionaires.

In 2025, CBRE Investment Management sees the potential for global listed real estate to outperform broad equities and offer a differentiated total return as compared to the private markets. As per the firm, the listed real estate remains in the early days of a new upcycle, one where long-term yields remain range-bound, earnings continue to accelerate, listed capital market access remains abundant, and valuations can aid continued returns. In 2025, the listed real estate is expected to be characterized by accelerating organic earnings based on improved supply/demand throughout various sectors and access to capital supporting potential acquisitions and upside to estimates, among others.

Listed Real Estate- What’s Ahead?

CBRE Investment Management believes that a new cycle for listed real estate kicked off in Q4 2023 with the recognition of a pause in the rate hikes. The absence of hikes is expected to be powerful for listed real estate, even though there isn’t a strong fall in target rates themselves. Notably, real estate has performed well during periods of range-bound long-term yields. Over 2001-2007, the US 10-year bonds delivered between ~4% – 5%, and listed real estate managed to generate double-digit average returns. The investment firm also added that strong access to capital of listed real estate, versus more constrained private real estate participants, can be maintained moving forward.

READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.

Improved Earnings Growth Expected in Real Estate Sector

CBRE Investment Management sees earnings accelerating into 2025 across the real estate sectors. Globally, it expects 5% earnings growth, which is around double that of 2024 levels. Broad-based strength remains visible, with private-pay senior housing continuing to capitalize on powerful demographics and data center growth accelerating with generative AI. Also, the cell towers continue to gradually recover from customer churn, and retail and net leases have been performing, thanks to supply/demand and their prevailing capital costs.

The investment firm opines that the total return opportunity for REITs remains compelling. The listed real estate provides a ~4% dividend yield, which remains competitive versus private real estate income. This dividend continues to grow and is based on the conservative payout level. Amidst moderating central bank target rates as well as range-bound long-term yields, the firm believes that listed real estate is expected to prosper.

Our Methodology

We used the Finviz stock screener and Insider Monkey’s exclusive database of billionaire stock holdings to shortlist the companies catering to the broader real estate sector. We also mentioned the hedge fund sentiment around each stock, as of Q4 2024.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

A team of IT professionals working on a digital platform, indicating the company's agile digital services.

Equinix, Inc. (NASDAQ:EQIX)

Number of Billionaire Investors: 11

Number of Hedge Fund Holders: 56

Equinix, Inc. (NASDAQ:EQIX) is a retail provider of data centers, allowing enterprise tenants to house their servers and networking equipment in a co-located environment. CFRA analyst Kenneth Leon upped the company’s stock from “Hold” to “Strong Buy,” setting the price objective to $985.00. The company has a market leadership in a rapidly expanding industry. The analyst believes that Equinix, Inc. (NASDAQ:EQIX) remains at the core of technology markets and serves as a global provider of data centers essential for AI and cloud computing services. Furthermore, the analyst noted that industry fundamentals remain favorable for the company, with supply constraints in the market, exhibiting a healthy outlook for growth and performance.

Elsewhere, Wolfe Research upped the company’s stock from “Peer Perform” to “Outperform.” The firm’s favorable outlook stems from Equinix, Inc. (NASDAQ:EQIX)’s risk-adjusted growth profile. As per the analysts, the premium valuation is justified given the growth potential. Wolfe Research noted the strategic position of Equinix, Inc. (NASDAQ:EQIX) in the market and its capability to capitalize on the increasing need for data center services. Overall, the upgraded rating and new price target showcase its future performance and potential to deliver healthy returns.

Baron Funds, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:

“In the most recent quarter, the shares of Equinix, Inc. (NASDAQ:EQIX), the premier global operator of network-dense, carrier-neutral data centers, performed well following solid third quarter results. We continue to be optimistic about the long-term growth prospects for the company due to its interconnection focus among a highly curated customer ecosystem, irreplaceable global footprint, strong demand and pricing power, favorable supply backdrop, and evolving incremental demand vectors such as AI. Equinix has multiple levers to drive outsized bottom-line growth with operating leverage. Equinix should compound its earnings per share at approximately 10% over the next few years and we believe the prospects for outsized shareholder returns remain compelling from here given the superior secular growth prospects combined with a discounted valuation.

In the most recent quarter, we acquired additional shares of Equinix, Inc., the premier global operator of network-dense, carrier-neutral data centers

We continue to be optimistic about the long-term growth prospects for the company due to its interconnection focus among a highly curated customer ecosystem, irreplaceable global footprint, strong demand and pricing power, favorable supply backdrop and evolving incremental demand vectors such as AI. The company has multiple levers to drive outsized bottom-line growth with operating leverage. Equinix should compound its earnings per share at approximately 10% over the next few years and we believe the prospects for outsized shareholder returns remain compelling from here given the superior secular growth prospects combined with a discounted valuation.”

Overall, EQIX ranks 5th on our list of best real estate stocks to buy according to billionaires. While we acknowledge the potential of EQIX as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than EQIX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.

Disclosure: None. This article is originally published at Insider Monkey.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Most Discussed

  1. 1
     
     
     
     
  2. 2
     
     
     
     
  3. 3
     
     
     
     
  4. 4
     
     
     
     
  5. 5
     
     
     
     
  6. 6
     
     
     
     
  7. 7
     
     
     
     
  8. 8
     
     
     
     
  9. 9
     
     
     
     
  10. 10