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 Public Storage (NYSE:PSA) 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).
Aerial view of a thriving self-storage facility, showcasing the company’s expertise in acquisition and development.
Public Storage (NYSE:PSA)
5-Year Net Income Growth: 4.10%
5-Year Revenue Growth: 10.21%
TTM Net Income: $1.88 Billion
Number of Hedge Fund Holders: 30
Public Storage (NYSE:PSA) is a leading owner, operator, and developer of self-storage facilities. The company opened its first self-storage facility in 1972 and has grown over the years to become the largest owner and operator of self-storage facilities globally. It has numerous locations across Europe and the US and serves as one of the biggest landlords globally with over 170 million net rentable square feet of real estate.
Public Storage (NYSE:PSA) has maintained a leadership position in the self-storage market for nearly half a century. With half of the U.S. population residing within a Public Storage trade area, the firm has an unmatched owned scale. As compared to the self-storage REIT peer average, PSA has demonstrated consistently optimized occupancy and rent leadership.
For the second quarter, the firm recorded net income allocable to common shareholders of $468.4 million. FFO was $4.30 per diluted common share relative to $4.29 for the same period in 2023, slightly up 0.2% year-over-year. The firm also acquired two self-storage facilities with 0.1 million net rentable square feet other than opening two newly developed facilities and completing various expansion projects which added 0.4 million net rentable square feet together.
Since the beginning of 2019, the firm’s portfolio size has expanded by 35% through $11 billion of investment and an addition of 56 million square feet. Public Storage (NYSE:PSA) is an iconic brand that has delivered industry-leading revenue, NOI performance, and cash flow generation. With high-growth lease-up properties now making 22% of the total portfolio and growing, the future growth potential is vast.
Overall PSA ranks 4th on our list of the high growth real estate stocks that are profitable in 2024. While we acknowledge the potential of PSA 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 PSA 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.
