NNN REIT stock is doing well and has more catalysts ahead

NNN REIT's (NNN) stock price did well in 2024, surging to its highest record level. It has risen for five consecutive months, reaching its all-time high of $49.

Its total return this year is 16.31%, higher than the Vanguard Real Estate Fund (VNQ), which has risen by 12%. NNN has also done well in the last 12 months, rising by 46% while the VNQ and the SPY ETFs have jumped by 34% and 35%, respectively.

Good REIT with catalysts

NNN is a leading company that is a real estate investment trust (REIT). It operates as a triple-net lease, where tenants handle property taxes, insurance, and maintenance. 

The benefit of this model is that the company avoids the most volatile costs that companies go through. For example, the company is less exposed to employee costs, taxes, and insurance, meaning that it has higher margins.

The other top REITs using this approach are Realty Income, W.P. Carey, Agree Realty, and Essential Properties Realty Trust. In most periods, these REITs often do better than other companies in the industry.

Their business is also easy to predict since revenues are mostly determined by rental income, acquisitions, and disposals.

NNN owns over 3,500 properties, which it leases to companies in the retail industry. Its biggest client is 7-Eleven, one of the biggest retailers in the US. The other notable tenants Mister Car Wash, Camping World, Dave & Buster, Couche-Tard, Walgreens, and United Rentals. 

Most of these are good companies with a long track record of growing sales. Some of them, however, like AMC Theatre and Walgreens, are going through a relatively rough period. Still, NNN maintains an occupancy rate of 99.3%, higher than the industry average.

By segment, most of its stores are in the automotive industry, followed by convenience stores, restaurants, family entertainment, and recreational vehicle dealers. 

NNN has done well in the past few years as its revenue has risen from over $670 million in 2019 to over$853 million in the last twelve months.

Strong financial results

The NNN stock price has done well this year, helped by its recent financial results. Revenue rose to $216 million in the second quarter, a big increase from the $206 million it made in the same period last year.

NNN’s funds from operations (FFO) rose from $144 million to $152 million, while the core FFO jumped from $144 million to $152 million.

The adjusted AFFO rose from $146 million to $153 million. For the year's first half, revenue jumped to $432 while the FFO and AFFO jumped to $303 million and $306 million. 

FFO and AFFO are important metrics for REITs because the provide a more accurate reflection of its cash flow. It also standardises the performance of a business across the REIT industry.

NNN REIT expects its business to continue doing well, with the FFO per share rising to between $3.27 and $3.33 and the AFFO per share rising to between $3.31 and $3,37. It also expects to sell properties worth between $100 million and $120 million.

NNN REIT stock analysis

The weekly chart shows that the NNN REIT share price has been in a strong bull run in the past four years. It started going up in 2020 when it dropped to a low of $19. 

Most recently, NNN shares have flipped two key resistance levels: $44 (January 2023 high) and $46.40 (March 2020 high). 

NNN has remained above the 50-week and 200-week moving averages while the MACD and the Relative Strength Index (RSI) have continued rising.

Therefore, the stock will likely continue soaring as bulls target the next key resistance point at $50 now that the Fed has started to cut interest rates.