4 Reasons To Add St. Joe (JOE) Stock To Your Portfolio Now

Shares of St. Joe Company JOE, a real estate development and operating company, have been performing well, of late. In the past three months, the stock has rallied 8.8%, while the industry incurred a loss of 1.4%.

In fact, the rally might continue in the near term, as there are a number of favorable factors.

In second-quarter 2017, the company posted encouraging results in its real estate, leasing and timber segments. St. Joe has been making concerted efforts to expand its profit generating segments and actively shedding non-strategic assets. It is redeploying the proceeds from non-core asset sale into leasing, and resorts and leisure segments to achieve the desired balance in its segments. Moreover, the company’s strategy to maintain a low fixed expense structure should keep supporting its bottom-line performance.

If you haven’t taken advantage of the share price appreciation yet, the time is right for you to bet on the stock, as it is poised to ride on the growth trajectory.

Key Driving Factors

Upward Estimate Revisions: We note that earnings estimates for St. Joe have displayed a healthy uptrend. The company’s third-quarter and full-year 2017 earnings estimates moved up over the past seven days. Particularly, its third-quarter earnings estimate inched up by 33.3% to 4 cents, while the full-year estimate increased significantly over the past seven days.

Liquidity Strength: At the end of second-quarter 2017, St. Joe had cash and cash equivalents of $247.2 million, up from $241 million as of Dec 31, 2016. In addition, the company is exploring opportunities to sell assets that are not a strategic fit to its core real estate development activities, such as residential lots, timber land, rural land and/or related timber rights. These assets sale efforts provide the company substantial liquidity, which can be used to pursue extensive development plans.

Prudent Investments and Acquisitions:

 During the first half of 2017, the company expanded the size and scope of its leasing portfolio with the acquisition of the two Beckrich office buildings, which added more than 67,000 square feet of leasable space to the company’s portfolio. Also, the joint venture with HomeCorp for 240 apartment units is in sync with this strategy. It is also focused on strategic investments in its club and resort operations. The company’s efforts to fortify these segments will likely bolster its revenues. In fact, given the volatility in earnings from real estate and timber lines for the past quarters, performance of the company’s leasing segments offered some cushion.

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