Dream Stocks for Real Estate Investors

Investors are always hunting for the next big stock -- the dream stock whose price increases several times over when the market finally discovers it. It's easy to look back and see what the 10 best stocks of the past decade were. But I'm more interested in the tools that can not only help me find new stock ideas, but also have the resources necessary to evaluate tomorrow's greatest companies.

There is a tool that offers a variety of resources to help with finding tomorrow's leaders: Motley Fool CAPS, a 125,000-member community of investors helping each other beat the market.

We'll enlist CAPS to screen the real estate sector and get the story behind some of the more highly rated stocks. CAPS's nifty screener will help us find stocks with:

• A market cap of at least $100 million.
• A three-year revenue growth rate of at least 20%.
• A price-to-earnings ratio of less than 25.

Then we'll tap the collective intelligence of our CAPS members to see whether these companies present real opportunities -- or whether the numbers fail to tell the true story.

Opinions with the numbers
Below is a sample of stocks our screen returned. You can run this screen yourself -- remember, though, that your results may differ from ours as the market changes.

Data and star rankings from CAPS as of Feb. 9.

LoopNet
Despite a shaky commercial real estate sector, online marketplace LoopNet's traffic has been increasing steadily over the past several years, and it averaged five million unique quarterly visitors in 2008, up 11% over 2007. The site has generated more than six times the web site traffic of its next-closest competitor during the fourth quarter of 2008, giving it a huge lead. The firm has been feeling the heat of competition from CoStar, though.

While some investors are concerned about LoopNet losing its edge, the $2 per share in cash and absence of debt on its balance sheet has many investors confident in the company's position. Even with the risk of invigorated competition and a bleak real estate market, nearly 97% of the 2,007 CAPS members rating LoopNet expect it to outperform the market.

Jones Lang LaSalle
Real estate services company Jones Lang LaSalle has made numerous acquisitions over the past couple of years, which has helped it to boost revenue in several core segments. Shares in the property management and services firm got a boost recently when the company posted better-than-expected revenue numbers and growth in some areas, despite the tough economy. Additionally, many CAPS members feel that the company is priced too cheap and has many assets that are valued below market.

One area of real estate where many see good opportunity in the near term is in distressed asset management. Jones Lang LaSalle's value recovery services group is quickly gaining business, acting as a third-party adviser to lenders trying to recoup investments in defaulting malls and commercial properties. It could be a potentially booming business over the next few years as mall REITs like Simon Property Group (NYSE:SPG) and General Growth Properties (NYSE:GGP) face increasing pressure in the retail environment, and as stores like Macy's (NYSE:M) and Sears Holdings (NASDAQ:SHLD) downsize. With opportunities to make money regardless of the direction of real estate, 97% of the 896 CAPS members rating Jones Lang LaSalle are bullish.

Health Care REIT
A soon-to-be member of the S&P 500, Health Care REIT recently announced the company's 151st consecutive quarterly dividend. As the health care sector has not been hit as hard as other sectors during the recession, the company maintains a generous 7.2% yield for investors. The company made more than $1 billion of new investments in 2008, and it plans to shed its smaller, lower-occupancy properties to pursue its strategy of buying large properties associated with high-quality health facilities. Seeing less risk, more than 95% of the 310 CAPS members rating Health Care REIT see the stock beating the market.

Let 125,000 members be the judge
The collective wisdom of a huge pool of investors can help give context to a page of numbers developed through a stock screen. But even with an entire community of qualified opinions acting as the judge, individual investors are still the jury and should perform their own due diligence.

Run your favorite factors through the Motley Fool CAPS screener. It's totally free, and we think you'll like the results.