In this article, we will take a look at the 12 best warehouse and self-storage stocks to buy.
Real estate investment trusts, or REITs, are preferred by investors who want to partake in the growing real estate industry, without the burdens of actually owning property. According to Vic Patel, the founder of Forex Training Group, the current market for warehouse and self storage REITs is booming, and it is wise for investors to be bullish on these stocks. He explains his stance by stating that the COVID-19 pandemic caused a lot of unemployment, and people could not afford to make rental payments. Some people even sold their houses, which means demand for storage and warehouse REITs increased during the last year.
According to a snapshot of the US storage sector, 10.6% of households are currently renting a self storage unit, up from 9.4% in 2020. The annual industry revenue for self storage industry stands at $39.5 billion as of January 2021.
The self storage market was valued at $48.02 billion in 2020, and the value is expected to reach $64.71 billion by 2026, suggesting a CAGR of 5.45% during the forecast period. Increased urbanization is one of the major causes of storage industry growth, since new businesses need warehouses, and people shifting from rural to urban areas, or intercity migration for work also results in renting self storage units for personal belongings.
Some of the most noteworthy warehouse and self storage stocks include CubeSmart (NYSE:CUBE), Extra Space Storage Inc. (NYSE:EXR), Public Storage (NYSE:PSA), and WillScot Mobile Mini Holdings Corp. (NASDAQ:WSC), among others discussed at length below.
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Our Methodology
Let’s dive into the 12 best warehouse and self storage stocks to buy. We took into account hedge fund sentiment, analysts’ ratings, long-term growth potential, and fundamentals while choosing these stocks. The stocks are ranked based on their popularity amongst the hedge funds tracked by Insider Monkey, which was determined by the number of hedge funds that choose to invest in them.
Why should we pay attention to hedge fund sentiment while choosing stocks? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the S&P 500 ETF (SPY). Our stock picks outperformed the market by more than 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Best Warehouse and Self Storage Stocks to Buy
12. Duke Realty Corporation (NYSE:DRE)
Number of Hedge Fund Holders: 15
Duke Realty Corporation (NYSE:DRE) is a leading brand in the real estate industry, owning, developing, and managing a series of industrial and logistics properties. They own bulk warehouses and state-of-the-art distribution centers. Duke Realty Corporation has been in business since 1972, and over the years, the company has amassed properties in 19 logistics markets across the US, with imminent plans of expansion. Duke Realty Corporation also leverages e-commerce to successfully interact with potential clients and lease spaces via an online process.
Of the 873 hedge funds monitored by Insider Monkey, 15 were long Duke Realty Corporation at the end of June, with stakes worth $49.1 million. This is compared to 20 in the previous quarter, with hedge funds owning $279.6 million worth of stakes in the warehouse REIT.
On September 1, Barclays analyst Anthony Powell initiated coverage of Duke Realty Corporation with an Overweight rating, setting the price target at $57.
Billionaire American investor Israel Englander’s Millennium Management is the biggest stakeholder in Duke Realty Corporation, owning 259,718 shares that are valued at $12.29 million.
Duke Realty Corporation is an excellent warehouse and self-storage stock to purchase, much like CubeSmart, Extra Space Storage Inc., Public Storage, and WillScot Mobile Mini Holdings Corp..
11. STAG Industrial, Inc. (NYSE:STAG)
Number of Hedge Fund Holders: 15
The eleventh stock on our list of the best warehouse and self storage stocks to buy is STAG Industrial, Inc. (NYSE:STAG), which is a REIT focused on acquiring and operating single-tenant industrial properties across the United States. By focusing solely on industrial properties, STAG Industrial, Inc. has made it easier for investors to find a stable balance of growth and income.
At the end of the second quarter of 2021, 15 hedge funds tracked by Insider Monkey held stakes in STAG Industrial, Inc., worth $232.1 million, down from 17 in the previous quarter. The largest stakeholder in STAG Industrial, Inc. is Zimmer Partners, holding 1.68 million shares valued at $63.07 million.
STAG Industrial, Inc. announced second quarter earnings on July 27. The EPS for the company was $0.52, beating estimates by $0.02. Similarly, the actual revenue of $138.43 million also surpassed analysts’ estimations by $4.07 million.
On August 3, Michael Carroll, an analyst with RBC Capital, kept an Outperform rating on STAG Industrial, Inc.’s shares, with a price target of $46.
10. StorageVault Canada Inc. (NASDAQ:SVAUF)
Number of Hedge Fund Holders: N/A
StorageVault Canada Inc. (NASDAQ:SVAUF) owns, manages, and rents out self storage and portable storage space to both residential clients and commercial customers. In addition to the storage facilities, StorageVault Canada Inc. also offers document storage services, data management, and shredding services to multiple healthcare institutions and multiple government establishments. It is the only publicly listed self storage REIT in Canada, with more than 200 locations around the country. StorageVault Canada Inc. is the tenth stock on our list of of the best warehouse and self storage stocks to buy.
Scotiabank analyst Himanshu Gupta raised the price target from C$6.25 to C$6.5 on October 15, while keeping an Outperform rating on StorageVault Canada Inc.’s stock.
The company announced on October 15 that it had purchased two new storage locations from separate vendors, one in GTA and the other in Alberta, for a total of $8.7 million. The properties were paid for partly in cash, and 713,537 common shares worth $3.6 million were issued in StorageVault Canada Inc. as part of the payment. The transactions closed by StorageVault Canada Inc. this year are valued at $140.7 million with the completion of these two purchases.
StorageVault Canada Inc. is an excellent warehouse and self storage stock to purchase, much like CubeSmart, Extra Space Storage Inc., Public Storage, and WillScot Mobile Mini Holdings Corp..
9. PS Business Parks, Inc. (NYSE:PSB)
Number of Hedge Fund Holders: 16
PS Business Parks, Inc. (NYSE:PSB) is yet another American REIT that owns, develops, and manages several commercial properties, focusing mainly on multi-tenant industrial and office space. The company owns 28 million square feet of rental space, divided into 97 properties in California, Texas, Virginia, Florida, Maryland, and Washington State.
At the end of June, 16 hedge funds tracked by Insider Monkey owned stakes valued at $111.1 million, up from 12 in the previous quarter, with stakes worth $112.4 million. The largest stakeholder of PS Business Parks, Inc. is Osterweis Capital Management, with stakes amounting to $33.1 million.
Wells Fargo analyst Blaine Heck upgraded the shares from Underweight to Equal Weight, with a price target of $163. The analyst said that PS Business Parks, Inc. has recovered from the impact of the COVID-19 pandemic, and the company valuation is now in line with its competitors.
Heartland Mid Cap Value Fund by Heartland Advisors mentioned PS Business Parks, Inc. in their Q1 2021 investor letter. Here is what they said:
“Filling a niche. The Real Estate sector continued to add to the strong run it has enjoyed since the COVID-19 lows of early 2020. At that time, we took a stake in PS Business Parks, Inc. (PSB) based on our view that the market was being overly pessimistic about the long-term prospects for the real estate investment trust (REIT). Our actions were validated as the business has been a solid performer in the portfolio.
PS Business Parks operates in the industrial, warehouse, and “flex” (combination of industrial & office) real estate segment. Unlike competitors who often lease tens of thousands of square feet to single tenants, many of PS Business’ clients rent less than 5,000 square feet at a given location. The business also offers shorter leases— usually one to three years—than many of its peers…” (Click here to see the full text)
8. CubeSmart (NYSE:CUBE)
Number of Hedge Fund Holders: 18
The next stock on our list of of the best warehouse and self storage stocks to buy is CubeSmart, which is a Pennsylvania-based REIT focused on self storage facilities solely. They target both, residential and commercial segments for their storage facilities. When the company was founded in 2004, it was named U-Store-It-Trust, but in 2011, it was rebranded as CubeSmart. The company has over 1000 indoor storage facilities nationwide, making it the eighth stock on our list.
Out of the 873 hedge funds monitored by Insider Monkey, 18 were bullish on CubeSmart by the end of the June quarter, down from 25 in the first quarter. Ric Dillon of Diamond Hill Capital is the leading stakeholder in CubeSmart.
The company is actively making use of the rising e-commerce trend as a result of the COVID-19 pandemic and economic digitalization. On October 1, SmartView, a mobile app by CubeSmart, was launched so that customers could monitor current company performance. The customers can also track their personal data remotely using SmartView, an initiative by CubeSmart that is meant to drive the self storage industry forward.
7. National Storage Affiliates Trust (NYSE:NSA)
Number of Hedge Fund Holders: 20
The seventh stock on our list of the best warehouse and self storage stocks to buy is National Storage Affiliates Trust (NYSE:NSA), which is a self-managed REIT that owns and operates self storage facilities in high growth markets. The company has 55.2 million square feet of rental storage space, with 864 self storage facilities across 36 states in the US, as well as Puerto Rico. Since National Storage Affiliates Trust’s initial public offering in 2015, the REIT has exponentially grown by strategic pipeline acquisitions, third party acquisitions, and strategic joint ventures.
Of the exclusive hedge funds tracked by Insider Monkey, 20 held stakes amounting to $208 million in National Storage Affiliates Trust at the end of June, up from 14 in the previous quarter with stakes valued at $103.4 million. Israel Englander’s Millennium Management is the largest stakeholder in the company, with 1.82 million shares worth $92.25 million.
On October 7, Berenberg analyst Keegan Carl kept a Buy rating on National Storage Affiliates Trust, setting a price target of $62. He stated that the market seems to be underestimating the capacity for potential growth in the REIT industry.
The company announced a common share dividend of $0.41 on August 26, payable to shareholders on September 30. This dividend reflects a 7.9% increase as compared to the previous quarter, and a 20.6% jump from Q3 2020.
National Storage Affiliates Trust is an excellent warehouse and self storage stock to purchase, much like CubeSmart, Extra Space Storage Inc., Public Storage, and WillScot Mobile Mini Holdings Corp..
6. Extra Space Storage Inc. (NYSE:EXR)
Number of Hedge Fund Holders: 21
The sixth stock on our list of the best warehouse and self storage stocks to buy is Extra Space Storage Inc., which is a REIT based out of Utah, dealing in self storage facilities. Founded in 1977, Extra Space Storage Inc. is the second largest operator of self storage rental spaces in the United States.
At the end of June, 21 hedge funds in Insider Monkey’s database were bullish on Extra Space Storage Inc., down from 28 in the previous quarter. Jeffrey Furber of AEW Capital Management owns stakes worth $129.5 million in Extra Space Storage Inc., making him the largest stakeholder of the company.
On July 27, the actual FFO for the company was $1.64, beating consensus estimates by $0.10. The actual revenue for Extra Space Storage Inc. was $321.5 million, surpassing estimated revenue by $4.18 million.
Keegan Carl, a Berenberg analyst, kept a Buy rating on the stock with a $198 price target, owing to the company’s potential for future sustainable growth.
5. Life Storage, Inc. (NYSE:LSI)
Number of Hedge Fund Holders: 21
The fifth stock on our list of the top 5 warehouse and self storage stocks to buy is Life Storage, Inc. (NYSE:LSI), which is a New York-based REIT investing in self storage units. The company owns 67 million square feet of rentable space across 34 states, with 1000 storage units. Before 2017, Life Storage, Inc. operated under the name Uncle Bob’s Self Storage, but it later rebranded to reflect its customer-focused approach, progressive growth, and use of intelligent technology for sustainable self storage solutions.
Of the 873 elite funds tracked by Insider Monkey, 21 were long Life Storage, Inc. at the end of June, with reported stakes worth $261.5 million, down from 26 in the previous quarter.
Life Storage, Inc. reported earnings on August 3, with an actual FFO of $1.20, beating analysts’ consensus estimates by $0.06. The revenue for the company was $187.26 million, exceeding forecasted revenue by $8.97 million.
On October 7, Berenberg analyst Keegan Carl initiated coverage of Life Storage, Inc.’s stock with a Buy rating, announcing a price target of $143. Life Storage, Inc. announced an increase of 16% in quarterly common stock dividend on October 1. The new dividend paid to stakeholders would be $0.86 per share, up from $0.74. This will result in an annual dividend yield of 3%. Life Storage, Inc. CEO, Joe Saffire, stated that they were able to increase the dividend due to strong fundamentals of the firm, a powerful financial outlook for the future, and strong predicted cash flow.
4. AMERCO (NASDAQ:UHAL)
Number of Hedge Fund Holders: 21
AMERCO (NASDAQ:UHAL) is an American provider of property insurance, moving, and storage facilities. The Reno-based company facilitates customers with the rental of trucks, trailers, portable moving and storage units, specialty rental items, and self storage spaces. With 30,000 employees across several states, AMERCO is the fourth stock on our list of the top 5 warehouse and self storage stocks to buy.
Of the 873 hedge funds in Insider Monkey’s comprehensive database, 21 were long AMERCO, with reported stakes worth $817.1 million, down from 23 hedge funds in the previous quarter. David Abrams’ Abrams Capital Management is the largest stakeholder in AMERCO, with 561,258 shares worth $330.8 million. AMERCO represents 7.35% of Abrams’ 13F portfolio.
On August 4, the company announced its earnings for the second quarter of 2021. AMERCO reported earnings per share of $17.6, beating analysts’ consensus estimates by $9.54. The actual revenue for the company also surpassed analyst estimates by $235.82 million at $1.47 billion.
AMERCO declared a special dividend on common stock of $0.50 per share on October 8. This dividend would be payable on October 29.
Smead Value Fund, managed by Smead Capital Management, mentioned AMERCO in their Q2 2021 investor letter. The fund stated that REITs like AMERCO are heavily underestimated by analysts, which is disrespectful to the top performing stocks. Here is what they said:
“AMERCO (UHAL) backed off from terrific 12-month performance. Let them know if you’d like to rent a vehicle to go to Los Angeles from Phoenix. It only costs $189 to go to LA, but it cost $1,200 to rent the same vehicle in LA and drive it to Phoenix. These results can be directly tied to holding shares which are heavily under-owned by most institutions and professionals. Many of our companies are under-followed or downright disrespected by the analysts which are paid to research them. We hope we are still in an era where stock picking can shine.”
3. Public Storage (NYSE:PSA)
Number of Hedge Fund Holders: 27
The stock ranking third on our list of the top 5 warehouse and self storage stocks to buy is Public Storage, which is the largest self storage REIT in America. The company has more than 2200 storage facilities across the US, Canada, and Europe, and has total rentable space of 170 million square feet. Public Storage is traded as a S&P 500 Component.
Out of the hedge funds traced by Insider Monkey, 27 were bullish on Public Storage, with reported stakes worth $1.08 billion at the end of June. This is compared to 26 hedge funds in the previous quarter, with stakes amounting to $929 million. Ric Dillon’s Diamond Hill Capital is the biggest stakeholder of Public Storage, with stakes valued at $284.2 million.
On August 3, the company reported the actual FFO at $3.15, exceeding estimates by $0.21. The revenue also beat market estimates by $24.82 million at $829.32 million. On October 7, Berenberg analyst Keegan Carl kept a Hold rating on Public Storage with a price target of $321.
2. Prologis, Inc. (NYSE:PLD)
Number of Hedge Fund Holders: 40
Prologis, Inc. (NYSE:PLD) offers curated warehouse solutions to its clients at scale, and they take care of related labor, operations, and transportation for customers as well.
At the end of June, 40 hedge funds in Insider Monkey’s elite database reported owning stakes in Prologis, Inc., up from 39 in the previous quarter. Jeffrey Furber’s AEW Capital Management is the largest stakeholder in the company.
On July 19, the actual FFO of Prologis, Inc. for the second quarter was $1.01, beating analysts’ consensus estimates by $0.02. The revenue, however, missed estimates by $9.66 million at $1.01 billion.
BTIG analyst Thomas Catherwood kept a Buy rating on Prologis, Inc., and raised the price target to $146 on October 8. The analyst predicted higher earnings for the company based on its strategic capital and customer solutions.
Third Avenue Management mentioned Prologis, Inc. in one of its letters. Here is what they said about PLD in their Q1 2021 investor letter:
“Prologis, Inc. (a U.S.-based real estate investment trust that is the largest owner of modern logistic facilities with a platform that expands more than 950 million square feet of space in 19 countries globally) completing $2.0 billion USD of debt placements at a weighted average interest rate of 0.9% with an average term of more than 13 years. In the process, the company has further solidified one of the most compelling capital structures in the real estate industry with a prudent loan-to-value ratio of approximately 25% that is primarily comprised of fixed-rate debt at an average cost of 1.8% for a term that exceeds 10 years. As a result, the long-tenured management at Prologis (including one of the true leaders in the real estate space CEO Hamid Moghadam) have set up the company for what could be a very rewarding period ahead as incremental rental income and asset management fees seem likely to accrue disproportionately to shareholders on the “bottom-line” with its interest costs locked-in.”
1. WillScot Mobile Mini Holdings Corp. (NASDAQ:WSC)
Number of Hedge Fund Holders: 52
Ranking first on our list of the top 5 warehouse and self storage stocks to buy is WillScot Mobile Mini Holdings Corp., which is a leading American REIT formed as a result of a merger between WillScot and Mobile Mini. Whereas WillScot specializes in modular space solutions, Mobile Mini offered portable storage solutions.
At the end of June, 52 hedge funds were long WillScot Mobile Mini Holdings Corp., with stakes $1.39 billion, up from 47 in the previous quarter, with stakes amounting to $1.27 billion.
On August 9, Baird analyst Andrew Wittmann kept an Outperform rating on WillScot Mobile Mini Holdings Corp., with a price target of $37, up from $35. The analyst stated that the future of the company is positively bright, owing to good execution and strong asset economics.
Benzott Capital Advisors mentioned WillScot Mobile Mini Holdings Corp. in their Q4 2020 investor letter. Here is what they said:
“Willscot Mobile Mini Holdings (WSC): Reported solid financial results highlighted by rate increases in its modular segment and good cash flow. The merger of WillScot and Mobile Mini was completed in 3Q. The two business models are both based on strong recurring revenues from long duration leases and similar asset characteristics, such as long lives, low maintenance, high margin, short payback periods and strong cash flow generation. By combining the fleets, totaling over 365,000 units, the offering becomes more strategic and valuable to customers, and the diversification of the portfolio improves. The company is off to a good start following the merger.”
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This article is originally published at Insider Monkey.
