3 Key Stocks For Early 2026

Core Insights - The article discusses the anticipated rotation between asset classes, highlighting sectors poised for outperformance in 2026, particularly focusing on manufactured housing, discounted preferreds, and triple net REITs. Group 1: Manufactured Housing - Manufactured housing (MH) is expected to outperform due to its price advantage over site-built housing, making it a viable solution for many consumers facing high housing costs [3][4]. - Flagship Communities (MHCUF) demonstrates strong fundamentals with a same-store NOI growth of 10%, yet trades at a low valuation of 14.5X AFFO, which is significantly below the typical 20X AFFO for such growth rates [5][8]. - The sector can sustain organic rent growth of 5%-8% annually for the next decade, contributing to robust NOI growth of 8%-12% across the industry [4][5]. Group 2: Discounted Preferreds - Preferred stocks, particularly those of Gladstone Land (LAND), are currently mispriced, with the market treating them similarly to common stocks despite their different payout profiles [11][12]. - LAND's preferreds are seen as highly opportunistic due to their stability and the underlying asset class of farmland, which has a strong asset value protection [13][22]. - The preferreds have a total liquidation preference of $392 million, with sufficient asset coverage to protect against declines in farmland value [26][24]. Group 3: Triple Net REITs - Triple net REITs, such as Broadstone Net Lease (BNL), are positioned for recovery as the market has undervalued them based on past low growth rates, ignoring potential future growth [32][45]. - The average triple net REIT is currently trading at an AFFO yield of 8.1%, which is considered undervalued for a growing stream of cash flows [45][46]. - BNL is highlighted as a strong investment opportunity due to its combination of value and durable growth, trading at 11.51X AFFO with an 8.7% AFFO yield [46][49].