My Largest Holding: Killam Apartment REIT

Hello guys! For the past few months, Killam Apartment REIT has been leading the way as my top portfolio holding. Killam is in rental business. The REIT owns residential properties in six Canadian provinces. You may want to consult the company’s website if you want to see their rental properties.

I started to invest in Killam last year when the stock was trading under $13. I purchased 290 shares of KMP between February and May of 2017. At that time it was probably my 5th biggest holding. However, the stock has outperformed all of my other stocks and became number one. This year alone, the stock is up 23% and continues to trade at all time high.

So what should I do with the stock? Can it go higher? Should I trim my position and re-enter at pullback? These are the questions that are going into my head. So let’s evaluate the stock and decide what to do with it.

It’s current P/E ratio is 8.9x which is slightly higher compared to industry average of 8.5x. It’s current P/B ratio is 1.2x, inline with industry average. So based on these metrics alone, I wouldn’t say that the stock is expensive. It looks expensive on the chart, but it could easily go up another 10% from here. I’d put a price target of $17 for this year. I think this company should be traded at a premium because of the high quality properties and sound fundamentals. In fact, I’m ready to invest more money in it if the stock pulls back. They have exciting developments coming along in 2019 and 2020 so that also could be the catalyst for the stock to go higher.

Here are a few high-rises to be developed in 2019-2020. These buildings look very nice and occupancy rate is usually higher in newer buildings.

Let me know what would you do if this was your top holding. Would you let it run further?