Senior Housing: Senior Housing Properties Trust Jumps to 52-Week High; SNH, EQR, CPT

Senior Housing Properties Trust (SNH) established a new 52-week high yesterday at $24.35. Clearly investors are enthusiastic about the firm’s prospects. The rally was accompanied by higher than average volume, which adds to the momentum behind yesterday’s move.

The question is, can SNH continue moving higher? The stock has gained 3.45% during the past month, has a price-to-book value of 1.66 and a PEG ratio of 3.48.

Studies have shown that investors who buy stocks after hitting yearly highs during a bull market achieve higher average returns that the broad market indexes. This is a great example of the trader adage that “the trend is your friend.” However, these historical results are based on large averages—and some bullish momentum in the market. It is much more difficult to say whether SNH, as a single stock, will continue to hit new highs. But for the time being, things look promising.

SNH competes in the REIT – Residential industry with Equity Residential (EQR) –the largest firm in the industry group—and Camden Property Trust (CPT) [Chart – Analysis – News], who have returned 7.1% and 6.14% during the past month, respectively. SNH is likely to be sensitive to its competitors so future weakness in the REIT – Residential industry could be an early warning sign that things might be turning around.


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