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A research note by JP Morgan analyst Richard Choe says data center REITs are undervalued, but earnings growth will help get the valuation where it should be.
Choe wrote that third-party data center growth—data centers companies use to outsource their IT—has yet to reach its full potential.
Most companies still use in-house IT, Choe writes, but many are set to transition to third-party data centers, meaning a high ceiling for data center REITs, Data Center Knowledge reports.
Choe picked out three REIT stocks in particular: CyrusOne, QTS and Digital Realty (in that order) as potential strong performers for 2016.
JP Morgan generally sees smaller data-center REITs, with their potential for double-digit growth, as the hot item. [DCK]
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