EastGroup Properties (NYSE:EGP) is an industrial real estate investment trust focused mainly on the Sunbelt states of Florida, Texas, Arizona, California and North Carolina.
By US standards, its $9B market cap makes it a mid-sized company. In the era of trillion-dollar behemoths, EastGroup often goes under the radar.
That doesn’t mean, however, that its investors have been doing poorly. EGP stock is up nearly ten-fold from its 2009 bottom, not counting the dividends, which are always substantial for a REIT.
2022 wasn’t a good year for EastGroup, though. In the first ten months of that year, the share price fell 40% from an all-time high of $230 to under $138. It has been trying to recover for almost two years now, but the bulls have yet to reclaim the $200 mark.
Can they do it, and should we see such a breakout as a buy signal?
Yes, they might, but no, it shouldn’t be viewed as a buying opportunity. The 2022 bear market took the shape of a textbook five-wave impulse, marked 1-2-3-4-5 in wave (A).
The Elliott Wave theory states that a three-wave correction follows every impulse. Here, a simple A-B-C zigzag seems to be on the verge of completion. Wave A was an expanding leading diagonal, so wave C can only be another impulse pattern.
If this count is correct, wave C can lift EastGroup stock to the 61.8% fibonacci resistance level, where wave (B) should end.
Then, another notable decline in wave (C) can be expected to drag the stock below the bottom of wave (A).
In other words, downside targets near $130 and under would make sense once the bears return somewhere near the $200 mark.