Extra Space Named a Top Investment Pick for 2014

Posted on Jan 31 2014 - 8:57pm by James Overturf

Barron's RoundtableSelf-storage companies are known for making headlines about strange things people find in abandoned units, like NASA rockets and human organs.

But at Extra Space Storage, we like to break out of the ordinary, so this month we’ve gotten a little airtime in Barron’s regarding why we are a good investment for 2014.

Abby Joseph Cohen, a venerable member of the Barron’s Roundtable and a senior investment strategist at Goldman Sachs, has named Extra Space [EXR] as one of her top investment picks for the coming year.

Why EXR? Goldman’s research department has been looking at what businesses will likely perform well as the U.S. economy shows stronger growth. Apparently that’s us, and it helps that we have already been on the rise.

“The stock was up 15% in the past 12 months,” Cohen told Barron’s. “Funds from operations could rise to $2.42 in 2014 from $1.97 in 2013. The stock yields 3.4%.”

While she admits that the self-storage category hasn’t been the most stellar performer of late, she emphasizes that demand for storage is now solid and steady. The sluggish performance of the category was mostly due to the strength of the housing sector, since the markets presume that off-site storage isn’t a priority for new homeowners.

Cohen also notes that with a slowdown in the establishment of new storage facilities, supply will remain strong in relation to demand. And Extra Space has been growing by snapping up other companies with extant facilities instead of building new ones.

“Extra Space Storage has done a good job of consolidating smaller operators that had problems,” she says. “It has made a number of accretive acquisitions.”

Accretive acquisitions” is investment-speak for profitable purchases!

And “good job” is a pat on the back we at Extra Space will gladly accept with thanks.