ProLogis (PLD ), No. 1 in industrial distribution centers worldwide, has achieved quite a feat: It hit analysts' 12-month price targets of 27 to 28 in just four months. Shares vaulted from 23 in February to 28 on June 10, driven by strong earnings and a hefty dividend yield of 5.1%. ProLogis, structured as a real estate investment trust (REIT), has property holdings and management skills that deserve a p-e ratio of 12.5, says Stephanie Krewson of BB&T Capital Markets. It owns and manages 1,728 facilities in the U.S. and 23 countries in Europe and Asia. Chief Financial Officer Walter Rakowich says ProLogis expects to sign contracts in China and Japan before yearend. ProLogis picks the location for warehouses, buys the land, and leases the centers it builds to 3,600 clients, such as General Electric (GE ) FedEx (FDX ), and Altria Group (MO ) ProLogis makes money on rents and management fees. Investors get decent returns from the stock's rise and dividends, notes Krewson, who expects earnings of $2.40 a share in 2003 and $2.56 in 2004, vs. 2002's $1.20. Ritson Ferguson, investment chief at ING Clarion Real Estate Securities, which owns shares, says ProLogis delivers solid returns and sees the stock moving higher. "ProLogis is one of the best investment values in industrial real estate," especially in a recovery, he adds.
Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.
By Gene G. Marcial