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 Prologis, Inc. (NYSE:PLD) 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.
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).
Is Prologis, Inc. (PLD) the Best Real Estate Stock to Buy According to Billionaires?
A large logistic facility within the industrial real estate sector.
Prologis, Inc. (NYSE:PLD) is the global leader in logistics real estate with an emphasis on high-barrier, high-growth markets. Blaine Heck, an analyst from Wells Fargo, maintained a “Buy” rating on the company’s stock. The associated price target was $146.00. The analyst’s rating is backed by factors demonstrating the company’s stable management transition and positive leasing trends. As per the analyst, Prologis, Inc. (NYSE:PLD)’s recent earnings report demonstrated optimism with higher leasing activity and a conservative initial guidance, reflecting the potential for better-than-expected performance in 2025. Its large platform and development expertise set it apart from competitors, which contributed to the rating. The company highlighted that post-election leasing activity remained healthy, and its conversations with customers support the expectation that the broader market is nearing an inflection point.
For FY 2025, Prologis, Inc. (NYSE:PLD) expects net earnings attributable to common stockholders of between $3.45 to $3.70. Elsewhere, UBS remains optimistic about the company, given its strategic initiatives and the healthy fundamentals of the industrial real estate market. It highlighted several positive indicators for the leasing environment, which are beginning to emerge. Prologis, Inc. (NYSE:PLD) noted a normalization of supply and demand dynamics in the broader market.
Carillon Tower Advisers, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“Prologis, Inc. (NYSE:PLD) detracted from performance because of ongoing challenges facing industrial real estate investment trusts more broadly. The company reported solid results for the third quarter, but the industrial space remains oversupplied — though the problem is abating — and clients chose to delay leasing decisions until aft er the U.S. presidential election.”
Overall, PLD ranks 7th on our list of best real estate stocks to buy according to billionaires. While we acknowledge the potential of PLD 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 PLD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
