The Stockland Corporation Ltd (ASX: SGP) share price has slumped 41.34% lower in 2020 and is underperforming the S&P/ASX 200 Index (ASX: XJO) – but is it in the buy zone yet?

Why the Stockland share price has been hammered

Let’s start with what Stockland actually does. The group is a real estate investment trust (REIT) that invests in a large portfolio of commercial and residential property. In fact, Stockland’s portfolio spans residential, retail, workplace and logistics, and retirement living villages.

On the surface, the Stockland share price looks to be a bargain. A diversified real estate manager with $7 billion in assets that are trading 40% lower this year – what’s not to like?

But these aren’t normal times and investors have been spooked. Specifically, it’s quite hard to value real estate assets right now. COVID-19 restrictions have reduced demand in the retail and office sectors. That could mean fewer tenants and/or lower rent in the future which lowers asset values.

These valuation questions and hit to earnings have rocked the Stockland share price hard this year. But, state and federal governments are slowly easing restrictions, so could Stockland be undervalued right now?

Is now a good time to buy the ASX REIT?

Now, just because an ASX share has fallen lower does not necessarily make it a buy. On the other hand, a long-term investor should be able to see through the day-to-day or month-to-month noise.

The real question is whether or not the Stockland share price is appropriately valued. Do the current conditions make the Aussie REIT worth less in the future? My answer is probably.

It’s true that rents will take a long time to recover. There’s pressure right across the economy, including residential real estate with high unemployment testing asset quality.

On the other hand, I think the Stockland share price will bounce back. Stockland is a strong ASX dividend share that is currently yielding 10.17%. Of course, this may well be slashed due to soft earnings and being artificially high from the share price declines. However, I believe we’ll see more shoppers back in retail centres and continued demand for real estate assets.

So, while the Stockland share price may be worth less, I don’t think it’s worth 40% less. That means the current $2.71 per share valuation could be a steal if you’re investing for the long-term.

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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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It’s funny how you never hear people talk about their superannuation until there’s some good old-fashioned volatility in the markets. Unfortunately, it’s normally not things which I find encouraging to hear.

See, some people get the idea that when the share market is crashing, it’s then a good time to convert the capital in their super funds from ASX shares to cash or fixed-interest investments. You know, so they ‘don’t lose any more’.

This is a terrible idea and a terrible way to treat your retirement savings. Here’s why.

When people start realising the share market is ‘crashing’, it’s normally after the markets have already lost a healthy chunk of their value, say 10-15%.

By the time they convert their shares to cash within their super fund, it might be at 20%. So you’re selling your assets at a 20% discount and going to cash, locking in a substantial loss.

People usually decide to go back to shares when the markets are recovering, too. Some of the best days of positive returns in the share market often come after days of heavy selling. So it’s highly likely that anyone who is trying to convert their cash back into shares will miss most of these days.

What’s really happening is losses are being locked in, and gains locked out. It’s an awful way to invest.

What should you do with your super if there’s a market crash?

Well, if you’re more than 10 years away from retirement, either do nothing or add more cash! You have plenty of time to ride out any future crashes and benefit from buying more shares when they’re on sale. Playing around with your super fund when there’s volatility in the markets will not help your retirement fund at all.

If you’re nearing retirement and wish to be a little more conservative with your capital, the time to put this in motion is when times are good, not in the middle of a market crash. Yes, this will take a small amount of foresight and might involve giving up some potential gains. But that’s the price of reducing volatility – there’s not really a free lunch here.

So have a think about what you would do if the markets fell 15% next week. Hopefully, the answer is nothing but if it isn’t, make a plan now so you don’t have to when it’s too late!

More reading

• ASX 200 drops 1.7%, Xero reports a profit
• 3 top ASX 200 shares every investor should buy
• ASX small-cap sector rallies strongly during April
• Got $5,000 to spend? Here are 5 ASX shares you can buy today
• Goldman Sachs names 5 reasons iron ore prices won’t crash

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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