2 REITs Looking Good Entering the Day

Sifting through my charts this morning I came across a significant number of strong charts that are at or near oversold levels. Two that caught my eye were in the same sector - REITs.

• Digital Realty Trust ($DLR) - Owns facilities that are leased mainly to technology companies to house their electronic equipment (think cloud computing). The larger servers and storage devices need to be in well maintained facilities that DLR offers. Stock is holding above support at $75 and pays a 3.9% dividend yield.
• Public Storage ($PSA) - Sitting on support at $142.50, the REIT owns and operates storage facilities around the country. The current dividend yield is 3.0%.
  

ETF of the Day - First Trust IPOX 100 ETF

First Trust IPOX 100 Index ETF ($FPX)

The name can be a little deceiving because it suggests it invests in 100 recent IPOs. The ETF does just that, but investors must realize that the stocks can trade for up to 1000 days after they become public to be considered for the ETF. The biggest holdings as of today are Visa ($V), Philip Morris International ($PM), General Motors ($GM), and Kinder Morgan ($KMI).

As far as sectors, IT makes up 25%, consumer discretionary 23%, consumer staples 18%, and energy 14%. Investors hoping to get a large exposure to the more recent IPOs and cloud computing will be disappointed. That being said, the ETF hit a new all-time high last week and the top 10 stocks are impressive. The net expense ratio on the ETF is 0.60%.

Stock of the Day - Digital Realty Trust

Digital Realty Trust ($DLR)

The craze surrounding the niche cloud computing sector is real as evidenced by the booming market valuations of the companies and the number of small firms being purchased by the big tech names. Investors have a handful of names in the sector they could purchase to gain exposure to what that specific company may offer.

However, there is a secondary play on the cloud computing boom - a Real Estate Investment Trust (REIT).

Digital Realty Trust ($DLR) is a REIT that owns, develops, and manages technology-related properties. It focuses on properties that are centrally located and that can offer secure data centers to Fortune 1000 companies. As the need for more data and storage increases dramatically in the coming decade, the REITs that offer the properties to store this data properly will boom. $DLR is in this category.

On top of the fact the stock is breaking out to a new all-time high today, it also pays a 4.1% dividend, which is double that of the 10-year Treasury.

The ideal entry point is near the $70, as there is support near the $68 area.

Cloud Computing ETF - Playing More Mergers

The First Trust ISE Cloud Computing ETF ($SKYY) is a basket of 40 stocks that are related to the niche sector in some manner.

Top holdings include Netsuite ($N), Rightnow Technologies ($RNOW - recently agreed to be purchased by Oracle), Cisco ($CSCO), Google ($GOOG), and TIBCO Software ($TIBX).

From a low on 8/19/11 the ETF is up 23% versus a gain of 13% for the $SPY. Of all the technology niche sectors, Cloud Computing continues to be a favorite of mine.