Digital Realty Trust (DLR-N)

They reported great bookings. To play AI, invest in data centres. 

Second-largest data centre REIT globally. Record industry leasing last quarter, 4 times as much as a year ago. Tenants are big tech, with lots of capital to put into data centres to support cloud rollout. Coming AI boom, will benefit. Pricing power. Over 5% internal growth annually, could be higher. Modest premium to NAV, and the NAV will increase over the years. Yield is 3.4%.

One of two pure plays on data centres. Beat on top and bottom raised guidance. 12-month price target of $162.50. Yield is 3.4%.

Owns most of its data centres, whereas EQIX has arrangements with customers. As well, EQIX stock went through the "death cross", which is usually not good. 

DLR is a fundamentally strong REIT, with expanding net profit margins and ROE, and it generates good free cash flows. Its yield is attractive, although its Funds From Operations (FFO) to debt have been declining over the past few years, indicating its debt levels have increased at a faster rate than FFO. It trades at a high valuation, but this can be justified given its strong fundamentals. Given a potential peak in interest rates, the underlying secular trend growth in the data center industry, and its strong fundamentals, we would be comfortable holding or adding slowly to this name.
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Buy in tranches with each increase of 0.25% in interest rates. Likes DLR.

The chart shows a nice uptrend since late May, and coming after a 2-year downtrend before peaking at $180. It's a recovery story. Is there enough interest for this to break above $120 to $140? Watch weekly closes, rather than daily closes, because there are five data points in a week.

(A Top Pick Dec 06/19, Up 22%) Carrier-neutral data centre. Now prefers Equinix. 12-month price target of $165.50, so there's still some runway.