The Scentre Group (ASX: SCG) share price has been smashed in 2020 but I think the Aussie REIT can surge higher if COVID-19 restrictions ease.
The post Coronavirus: Why the Scentre (ASX:SCG) share price can benefit from eased restrictions appeared first on Motley Fool Australia. –
Scentre Group (ASX: SCG) shares have been smashed in 2020. The Scentre share price is down 42.6% in 2020 despite surging 5.2% higher in yesterday’s trade.
However, I think the Aussie real estate investment trust (REIT) is one of the best-placed shares for an easing of coronavirus restrictions. Here are a few reasons to consider watching the Scentre share price in 2020.
The Scentre share price is cheap
Shares in the Westfield owner and operator look cheap right now. Of course, ASX shares don’t fall for no reason and investors are expecting lower future earnings.
COVID-19 restrictions have hit shopping centres hard in 2020 with tenants and landlords battling to maintain profitability. That’s seen the Scentre share price slump lower but I think that creates a buying opportunity.
It’s hard to price in coronavirus impacts
One of the hardest aspects of stock picking is working out what is already priced into a company’s valuation. For instance, the ASX banks have been hammered and investors are worried about further economic deterioration. However, that deterioration is largely expected by the market and ASX bank valuations have been falling accordingly.
COVID-19 is something of a unique beast. No one knows when or how current restrictions will be eased or even re-introduced. That makes pricing in expected loss of earnings for retail REITs very hard right now.
Market dislocation is a good thing for value-minded investors. I think the Scentre share price could rocket higher if we see restrictions ease quicker than expected.
Scentre is backed by prime real estate assets
On top of the above, Scentre is fundamentally backed by a huge portfolio of real estate. And that’s not just any real estate, some of these are huge blocks of prime real estate in major cities.
That means even if earnings remain depressed in the short to medium term, I think a strong asset backing is worth considering at a certain price.
The Scentre share price has been under pressure in 2020 but I still think there’s a lot to like at a 42.6% discount.
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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.