UBS’ Bottom Quant Stocks In AI, IT, Healthcare & Others: 29 Stocks In All Sectors

21. Public Storage (NYSE:PSA)

Number of Hedge Fund Investors In Q2 2024: 30

Sector: Real Estate

Public Storage (NYSE:PSA) is one of the largest storage space operators in the world. It has a presence in the US market as well as the Western European market. These provide Public Storage (NYSE:PSA) access to wealthy nations which typically have higher spending power to rent out storage facilities whether for personal or business use. Yet, since this spending is more discretionary in nature, Public Storage (NYSE:PSA)’s shares have been lackluster in 2024 and are up by just 6.8% year to date. The impact is also visible in the minutiae of the firm’s income statement, as Public Storage (NYSE:PSA)’s same-store storage revenue dropped by 0.5% to $1.8 billion during the first half of this year. This segment accounts for 82% of the firm’s overall revenue, and therefore, its robust performance is necessary for Public Storage (NYSE:PSA)’s overall hypothesis.

Public Storage (NYSE:PSA)’s management commented on the trends in self-storage during the Q3 2024 earnings call. Here is what they said:

“In particular pricing for new customers is stabilizing with move-in rents down 9% year-over-year in the third quarter and down 5% in October.

This is a meaningful improvement from the first quarter of this year when move-in rents were down 16%. Our in-place customers are also behaving very well. Payment patterns are strong, average length of stay is long and move-outs are down year-to-date. All of this speaks to the convenience and affordability we provide to our customers. With move-in rents down nearly 30% since 2022, we have become even more affordable relative to other space alternatives. including moving into a larger home or apartment just to get the incremental space. Self-storage is the affordable and convenient choice. The supply environment is also on a favorable path with deliveries of new competitive properties slowing further over the next couple of years. Less new competition will support operating fundamentals on top of the improving demand trends.

We continue to focus on growth enhancing initiatives that are unique to us as well. Public Storage customers are fully embracing the new and modern experience we’ve created by putting a full slate of digital engagement options in their hands. These options complement the service provided by our fantastic property managers, local teams and customer care center representatives. The ability to choose between interacting digitally and in-person is a major draw to customer seeking self-storage today. I am proud of the entire team’s efforts in creating the industry’s most comprehensive, hybrid, digital operating model that cohesively connects our customers, team and systems across field and corporate operations. And we’re tracking ahead of schedule on our transformation with now 75% move-ins using eRental, our digital online lease.”