We recently compiled a list of the 11 Best Self Storage and Apartment Stocks to Buy Now and in this article, we discuss whether WillScot Mobile Mini Holdings Corp. (NASDAQ:WSC) is the best self-storage stock in the world.
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.
An exterior view of a large self-storage facility in the US.
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 WillScot Mobile Mini Holdings Corp. (NASDAQ:WSC) the Best Self Storage Stock in the World?
WillScot Mobile Mini Holdings Corp. (NASDAQ:WSC)
Number of Hedge Fund Holders: 66
WillScot Mobile Mini Holdings Corp (NASDAQ:WSC), headquartered in Phoenix, Arizona, is a leading provider of temporary space solutions. The company offers a wide range of options, including modular offices, mobile classrooms, and storage units. It serves diverse markets across North America with a network exceeding 240 locations.
WillScot Mobile Mini Holdings Corp. (NASDAQ:WSC) recently reported its Q1 2024 earnings results. Revenue grew by 3.8% YoY to $587.2 million, exceeding analysts’ expectations by 1.1%. However, net income fell by 26% to $56.2 million, resulting in a lower profit margin (9.6%) compared to the previous year (14%). This decline in profitability led to an EPS of $0.30.
Despite the drop in earnings, WillScot Mobile Mini Holdings Corp. (NASDAQ:WSC) projects revenue growth of 11% annually over the next 3 years, outpacing the expected 7.9% growth for the US construction industry.
Analysts are bullish on WillScot Mobile Mini Holdings Corp. (WSC) with a “Strong Buy” consensus rating. The average price target reflects a potential upside of over 27%. This indicates strong confidence in the company’s future prospects.
Here’s what Silver Beech Capital said about WillScot Mobile Mini Holdings Corp (NASDAQ:WSC) in its Q1 2024 investor letter:
“We recently initiated a new position in WillScot Mobile Mini Holdings Corp. (NASDAQ:WSC). WillScot is the leading North American provider of portable and turnkey modular building units and storage space. WillScot’s 156k modular units and 212k portable storage units are leased to a diverse 80k+ customer base across industrial, infrastructure, education, government, and natural resources users. WillScot’s modular products are depicted in Figure 2 below.
WillScot’s products are mission-critical and possess minimal technological or obsolescence risk. On a large construction site, project managers work in modular units where they update and store site-specific documents (work orders, safety reports, etc.). WillScot also offers customers an extensive array of value-added products and services (“VAPS”). These VAPS include unit furnishings, air conditioning, solar panels, restrooms, tech hardware, and many other add-ons. WillScot’s extensive offerings help fulfill a structural shift in customer demand for flexible modular and reduced waste/lower carbon footprint solutions…” (Click here to read the full text)
Overall, WillScot Mobile Mini Holdings Corp (NASDAQ:WSC) ranks 1st 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.