By Justin Spittler, editor, Casey Daily Dispatch
Abercrombie & Fitch plunged 23% on Monday.
It was the stock’s worst one-day crash since 2000. The sell-off began after the once-iconic American retailer shared bad news. It admitted that no one wants to buy the company.
You see, Abercrombie is in turmoil. Its sales have been falling since 2014. It plans to close 60 stores over the next seven months.
It desperately needs a lifeline. So, the company was trying to sell itself. But no one wants to buy it. The company’s too toxic.
After Monday’s crash, Abercrombie is down 54% over the past year. It’s trading at its lowest price since the dot-com crash.
But it’s likely headed lower. It could even go bankrupt.
If it does, it will become the latest victim in what I’ve been calling the “retail apocalypse.” Regular readers know this is a genuine crisis.
• Traditional retailers are failing left and right…
More than 3,000 retail stores have already closed this year.
By the end of the year, more than 8,000 stores could close their doors. That would be the most ever in one year.
This is why I’ve been urging you to avoid traditional retail and mall stocks.
If you took my advice, great. You’re out of harm’s way.
But I didn’t write this essay to tell you what you already know. I wrote it to tell you how to turn the retail apocalypse into huge profits.
You won’t even have to short (bet against) stocks or do anything else sophisticated. You just have to buy a special kind of real estate stock.
I’ll tell you more about that opportunity in a second. But let’s first look at why so many brick-and-mortar retailers are dying.
• Americans aren’t spending money like they did in the old days…
They’re visiting the mall less…and doing more shopping online.
Just look at the chart below. You can see that online shopping has increased nearly tenfold since 2000.
This is clearly bad for traditional retailers and malls. But online shopping has triggered a huge boom in a small corner of the real estate market.
• I’m talking about industrial real estate companies…
These companies own and operate warehouses and distribution centers.
It’s not a sexy business. But it’s essential…and it can hand you massive gains in the years ahead.
After all, every dollar of online sales requires three times as much space as a traditional retailer. Plus, online retailers need warehouses to store and ship goods, now more than ever.
Just look at Amazon, the world’s biggest online retailer. Its demand for warehouse space surged 35% per year since 2007. That’s breakneck speed.
Walmart, Alibaba, Overstock.com, and many other major retailers have also invested billions in warehouses. According to research firm Jones Lang LaSalle, online shopping has accounted for 40% of industrial real estate demand.
• The industrial real estate market is now booming…
Rental rates for industrial space have skyrocketed. In the U.S., industrial rents have climbed 9% over the past year. They’re up 25% over the past three years.
Meanwhile, occupancy rates for industrial space are at the highest level since the dot-com bubble.
Online shopping has also given industrial real estate stocks a huge boost.
Just look at the chart below. It compares the performance of warehouse stocks with the S&P 500 over the last 12 months.
You can see that warehouse stocks are up around 20% over the past year. That’s better than S&P 500’s return over the same period.
Now, you might look at this chart and think you missed your chance. But don’t worry. This bull market has just begun.
• Online shopping is going to double over the next five years…
If this happens, retailers will need an additional 600 million square feet of new warehouse space.
There’s just one problem. Jones Lang LaSalle explained it in a recent report:
There’s simply little to no industrial product available… The market is on fire today for industrial property owners.
In other words, there won’t be enough warehouse space to supply the next leg of this boom. That’s great news for industrial real estate companies. It means they can charge sky-high rental rates.
• You, too, can cash in on this industrial real estate boom…
The easiest way to do this is to buy an industrial real estate investment trust (REIT). These companies own, lease, and operate warehouses and distribution centers.
Here are five industrial REITs to consider for your portfolio:
Duke Realty (DRE)
DCT Industrial Trust (DCT)
PS Business Parks (PSB)
First Industrial Realty Trust (FR)
These stocks are a great way to profit from the online shopping boom. And they trade on the New York Stock Exchange like most other stocks.
Delray Beach, Florida
July 12, 2017
P.S. Mark your calendar… Doug will be speaking at the 10th annual FreedomFest later this month. FreedomFest is an annual festival where free minds meet to talk, strategize, socialize, and celebrate liberty.
In this can’t-miss event, Doug will unveil his newest novel, Drug Lord. He will also be involved in several debates, including a popular mock trial, “The Police on Trial.” FreedomFest 2017 will take place July 19–22 at the Paris Las Vegas resort in Nevada. To learn how to register—and how to get $100 off the ticket price—click here.