Doug Kass, the veteran hedge fund manager known for his fundamental analysis, has identified St. Joe Co. (JOE) as his top stock pick for 2025. Kass, who has a history of uncovering asymmetric investment opportunities where the potential upside outweighs the downside risk, believes that St. Joe Co. fits this mold perfectly.
St. Joe, a real estate developer based in Panama City Beach, Florida, is primarily focused on developing its substantial land holdings in northwest Florida. With projects spanning residential, commercial, and hospitality segments, the company has seen significant growth over the past five years, despite recent fluctuations in its stock price. Over the last five years, St. Joe’s stock has increased nearly 140%, although it has fallen about 18% over the past year.
Kass has a personal connection to St. Joe, having written his first sell-side research report on St. Joe Paper (the company’s former name) back in 1992. Today, St. Joe operates not only in real estate but also in hospitality and leasing, with recent reports showing growth in these areas despite a slight drop in overall revenue.
The company’s CEO, Jorge Gonzalez, highlighted the strong demand for homesites, with more than 22,000 sites in development. The company also plans to expand its medical campus, which is expected to drive regional healthcare and economic growth.
In addition to Kass’s analysis, Praetorian Capital’s Harris Kupperman has attached a high net asset value (NAV) to the company, estimating it could be worth $250 per share, well above its current price of around $45 per share. Kupperman believes St. Joe is well-positioned to benefit from the rapid growth in the Florida Panhandle, with significant potential for value creation through intelligent land development.
Despite some frustration among investors over the past year, Kupperman remains optimistic about the company’s long-term value, particularly as it continues to develop its vast landbank. Kupperman has met regularly with St. Joe’s management, praising their approach and suggesting that buybacks could help close the gap between the company’s market price and its NAV.
While the company has faced challenges in 2024, including a slight decline in earnings and revenue, the broader outlook for St. Joe Co. remains positive, according to Kass and Kupperman. The combination of strong asset values, a growing region, and an intelligent development strategy makes St. Joe Co. a standout pick for the year ahead.
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