We recently compiled a list of the 11 Best Self Storage and Apartment Stocks to Buy Now and in this article, we discuss where U-Haul Holding Company (NYSE:UHAL) ranks in the major self-storage stocks in 2024.
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 line of rental trucks, trailers and portable units parked at a self-storage facility.
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).”
Where Does U-Haul Holding Company (NYSE:UHAL) Rank in the Major Self-Storage Stocks in 2024?
U-Haul Holding Company (NYSE:UHAL)
Number of Hedge Fund Holders: 25
U-Haul Holding Company (NYSE:UHAL) is one of the largest self-storage operators in the country.
In the fourth quarter of fiscal 2024, the company’s self-storage revenues rose by $17.5 million, or 9%, compared to the same quarter in fiscal year 2023. Meanwhile, for the entire fiscal year, revenues increased by $86.6 million, or 12% YoY. Furthermore, the average number of occupied units, during Q4 FY2024 increased by 6% YoY, or 31,000 units.
Overall, analysts have a Neutral sentiment towards the stock, giving it an average 12-month price of $70.30. This price target reflects an upside potential of over 8% from the current price levels.
Here’s what Old West Investment Management, Llc said about U-Haul Holding Company (NYSE:UHAL) in its Q4 2023 investor letter:
“A real sweet spot for our investment style is discovering companies run by owner/managers, CEOs with huge ownership stakes in their company. It’s hard to find a better example of this then Joe Shoen, CEO and Chairman of U-Haul Holding Company (NYSE:UHAL). Shoen owns 55% of the company, with his stake valued at nearly $6 Billion, and his total annual compensation is $1 million. He clearly has more to gain from a higher stock price than his paycheck.
UHAL is based in Reno, Nevada, and is North America’s largest “do-it-yourself” moving and storage operator. UHAL is synonymous with self-moving and is four times larger than its biggest competitor, Penske Truck Leasing. UHAL was founded in 1945 by Shoen’s father as a trailer rental company and began renting trucks in 1959. In 1973 they began their network of U-HAUL managed retail stores where they rent trucks and trailers, self-storage units and moving supplies like boxes and tape. UHAL has 23,000 locations in North America of which 2,200 are company-owned and over 21,000 are independent franchised dealers. UHAL’s rental fleet consists of 192,000 trucks, 138,000 trailers and 44,000 towing devices…” (Click here to read the full text)
Yacktman Asset Management is the leading hedge fund investor in the stock, with over 7 million shares worth more than $474.5 million.
Overall, U-Haul Holding Company (NYSE:UHAL) ranks 8th 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.
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Disclosure. None. This article is originally published on Insider Monkey.