Opinions
Stockchase Insights
Tricon Residential
TCN-T
BUY ON WEAKNESS
Mar 27, 2023
Stock price when the opinion was issued
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The market has punished it too much. It is in the residential rental sector in the U.S., especially in the sun belt. The rentals are affordable and appeal especially to the 35 to 44 year old demographic who want to rent good homes rather than buy. The share price is at a 40% discount to the total value of all its homes. Good opportunities should emerge.
TCN pays a decent dividend yield of 2.3% and has grown its dividend by ~3% annually over the past five years.
TCN is fairly levered, and we believe in a better market will be able to demonstrate its ability for high growth rates.
We would consider the current prices to be good entry points - the price to book multiple is 0.5X and its forward price to sales is 4.0X, the lowest across 10 years.
Due to its higher debt balances and uncertainty around the real estate market, we would not consider this to be a screaming buy yet, but we feel that in a better market, these prices will likely look attractive.
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