We recently compiled a list of the 8 High Growth Real Estate Stocks That Are Profitable in 2024. In this article, we are going to take a look at where CubeSmart (NYSE:CUBE) stands against the other high growth real estate stocks.

Real Estate Sector at a Glance: Recent Updates

In the week ended October 4, the average contract rate on a 30-year fixed-rate mortgage rose 22 basis points as stated by the Mortgage Bankers Association which marks the highest weekly increase in more than a year. As the 30-year fixed rate hit 6.36%, applications to refinance a home loan dropped 9% for the week while applications for a mortgage to purchase a home were reported to be flat, declining by 0.1% from the prior week. Relative to 1 year ago, refinance applications were up 159% and purchase applications were up 8%.

With the Fed cutting rates, many homebuyers who were on the sidelines for long are returning to the market with a rise in homebuying demand and purchase applications. Glenn Kelman, Redfin CEO, believes the Fed rate cut was late for the current season to have a major impact but would help many homebuyers in 2025. He told CNBC that only 2.5% of American homes changed hands within the last 12 months which indicates so many being locked into low mortgage rates. Thus, the market is still struggling with low inventory which is exactly going to be the gating factor for home sales in 2025. While the market looks forward to further rate cuts, Kelman thinks of inventory as a major long-term problem that remains unaddressed.

Another factor currently impacting US real estate is natural disasters such as hurricanes hitting Florida. In an interview with CNBC, Eddie Shapiro, Nest Seekers International president and CEO, discussed the state of the housing market in this regard. In his opinion, Florida is a rather strong and resilient market and hence the rebuilding and recovery would be quicker. Even with one rate cut, he views the momentum to be positive across the market. While the firm recorded its greatest August and September in a really long time, the overall market is entering a sweet spot for mortgage rates which are now in the 6% range.

Our Methodology:

In order to compile a list of the 8 high-growth real estate stocks that are profitable in 2024, we created an initial list of 30 companies with the biggest market caps in the sector. Moving on, we screened out those that had a positive net income in the last twelve months and a positive 5-year net income CAGR. Additionally, these companies were deemed high growth since they had their 5-year net revenue CAGR higher than 10%. Finally, we ranked the shortlisted companies in ascending order of their hedge funds, as of Q2 2024.

At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

CubeSmart (NYSE:CUBE)

5-Year Net Income Growth: 18.07%

5-Year Revenue Growth: 11.47%

TTM Net Income: $403.8 Million

Number of Hedge Fund Holders: 23

CubeSmart (NYSE:CUBE) is a self-administered and self-managed real estate company that focuses on the ownership, acquisition, operation, and development of self-storage facilities in the US. Thus, the company provides affordable and easily accessible storage space for residential and commercial customers.

CubeSmart has the privilege of being one of the largest owners and operators of self-storage properties in the nation with over 1,200 self-storage properties. The firm has a high-quality portfolio in an attractive industry with high margins and dynamic demand. CubeSmart boasts an extensive national footprint spanning 185 markets across 40 states and the District of Colombia and hence, remains diversified. The firm further diversifies its portfolio by exposure to secondary and tertiary markets through its third-party management programs and joint ventures.

During the fiscal second quarter, CubeSmart (NYSE:CUBE) benefitted from a marginally stronger seasonal uplift in demand. The firm reported FFO, as adjusted, of $146.0 million for the quarter as compared to $149.5 million for the second quarter of 2023. While the firm opened for operation two development projects in New Jersey and New York, it added 39 stores to its third-party management platform.

CubeSmart (NYSE:CUBE) is a leading player in self-storage with a focus on submarkets with attractive demographics for long-term demand trends. With the consistent growth in CubeSmart stores, its customer base has also substantially expanded over time. Furthermore, the firm’s external growth strategy remains robust through high-quality acquisitions and value-added joint ventures.

Overall CUBE ranks 5th on our list of the high growth real estate stocks that are profitable in 2024. While we acknowledge the potential of CUBE as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than CUBE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.