We recently compiled a list of the 11 Best Self Storage and Apartment Stocks to Buy Now and in this article, we discuss whether Americold Realty Trust Inc. (NYSE:COLD) is the number one self-storage stock across the globe.
The American dream of sprawling living spaces is undergoing a transformation. Increasing housing costs in densely populated areas and the rising need for frequent relocations have led more people to use self-storage facilities. Furthermore, as families expand and accumulate more belongings, the demand for additional storage space continues to grow.
The self-storage sector experienced many changes from 2020 to 2023. The pandemic fueled a boom, with users increasing by 970,000 and sales volume nearly tripling between 2020 and 2021. This boom was driven by relocations, remote work, and increased online shopping. However, 2022 saw moderation with declining home sales and consumer spending leading to slightly lower rental rates and a sales volume drop. The first three quarters of 2023 continued this trend, with economic factors contributing to a further downturn.
Looking ahead to 2024, the self-storage industry is expected to maintain stable occupancy rates and rental income, driven by the ongoing housing shortage. Although a slight uptick in new facilities (4.4%) is predicted, the housing shortage is likely to continue driving demand. According to Mordor Intelligence, the US self-storage market is projected to reach nearly $50 billion by 2029, reflecting a steady growth rate of 2.44%. This indicates continued investor confidence and a healthy market outlook.
Meanwhile, in the apartment sector, rent growth in 2024 is forecasted to be moderate, ranging from 2.5% to 3.7%. The sector is expected to experience slightly stronger growth in 2025. However, with the potential weakening of the labor market and increased supply, some areas may require rent concessions and reductions.
Overall, the US residential real estate market is experiencing steady growth, valued at $2.5 trillion in 2023. This positive trend is expected to continue as the valuation of this market is projected to reach $2.8 trillion by 2028. This jump in the valuation of the residential real estate market translates to a compound annual growth rate (CAGR) of 2.04% during the forecast period. Apartments hold a substantial share of the sector’s total demand. This dominance is likely due to the high number of apartment units being completed, with completions up by 26% as of 2023.
A row of self-storage units in a self-storage complex, showing the affordability and security offered by the company.
Our Methodology
We have compiled a list of the best self-storage and apartment stocks to buy based on hedge fund sentiment toward each stock. Our assessment of hedge fund sentiment is derived from Insider Monkey’s database of 919 elite hedge funds as of the first quarter of 2024. The best self-storage and apartment stocks to buy have been ranked in ascending order of the number of hedge fund investors in each company.
“Why are we interested in 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).”
Is Americold Realty Trust Inc. (NYSE:COLD) the Number One Self Storage Stock Across the Globe?
Americold Realty Trust Inc. (NYSE:COLD)
Number of Hedge Fund Holders: 33
Americold Realty Trust Inc (NYSE:COLD) based in Atlanta, Georgia, is the world’s second-largest owner and operator of temperature-controlled warehouses. The company manages a network of 245 facilities across the US, Europe, Canada, Australia, and New Zealand, totaling 1.5 billion cubic feet of storage. In addition to core warehousing, the company offers value-added services like supply management and transportation to its customers.
Americold Realty Trust Inc (NYSE:COLD) reported strong financial performance during Q1 2024 with adjusted funds from operations (AFFO) of $104.9 million ($0.37 per share), reflecting a year-over-year increase of over 28%. This success was driven by a record-breaking first quarter for same-store services margins (10.7%), a significant improvement of 6.71% compared to the same period last year. This margin increase translated to an additional $22 million in net operating income.
These impressive earnings drew positive attention from analysts. Barclays analyst Anthony Powell reiterated an Equal-Weight rating for the stock but increased the price target from $25 to $26 on May 24th. Similarly, Scotiabank analyst Greg McGinniss upgraded its rating from Sector Perform to Sector Outperform and raised the price target to $30 from $27.
At the end of the first quarter of 2024, 33 hedge funds reported owning a stake in Americold Realty Trust Inc (NYSE:COLD), making it one of the best self-storage and apartment stocks to buy now.
Overall, Americold Realty Trust Inc (NYSE:COLD) ranks 7th among the 11 best self-storage and apartment stocks to buy now. You can visit the 11 Best Self Storage and Apartment Stocks to Buy Now to see the other self-storage and apartment companies that are on the hedge fund radar.
While we acknowledge the potential of self-storage and apartment stocks, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
Read Next: Michael Burry Is Selling These Stocks and Jim Cramer is Recommending These Stocks.
Disclosure. None. This article is originally published on Insider Monkey.