I love FTSE 250 stocks. And I love value shares. That’s why I’m a fan of Safestore (LSE: SAFE).
The business does exactly what it says on the tin. It’s a self-storage unit provider. That’s not the most glamorous business model. But as long as I see potential for growth, I’m not too fussed.
I already own shares in the company. But I’d happily buy more today.
Turning their backs
While I’m bullish on Safestore, many investors don’t seem to share my view. In fact, the stock has been neglected in recent times.
In the last 12 months, the Safestore share price has plummeted 22.7%. In 2024 alone it’s seen over 12% shaved off its price.
That said, assessing its performance over a five-year period portrays a better picture. During that time, it’s moved up over 38%. That has me thinking now could be a smart time to swoop in and buy some more shares.
I’m still bullish
The reason for this is because like all my colleagues here at The Motley Fool, I invest for the long run. For me, that means a minimum period of five years. Therefore, this short-term blip in its price is an ideal time for me to load up.
This seems even more true when I look at its valuation. As I write, the shares on just 8.3 times earnings. That’s comfortably below the FTSE 250 average of 12.5.
I also like the passive income I can make by buying Safestore. And while a yield of 3.5% isn’t outstanding, it’s reasonable. To add to that, the firm has hiked its dividend for the last 13 consecutive years. During this time, it’s up by over 400%.
Not all plain sailing
That said, the company’s full-year results published 17 January showed only a 1% rise in its annual dividend to 30.1p. While it still grew, this isn’t nearly as much as shareholders have seen in years gone by.
There were also a few other concerns from the release. For example, profit before tax more than halved. Yet, in fairness, that’s largely due to higher interest impacting its property value, which I deem a short-term concern. Excluding valuation changes, underlying earnings jumped by over 5%. Revenues were up a similar amount too.
A chance to buy
So, I think investors may have overreacted to Safestore’s latest results. I’d still rush to buy the stock today if I had the cash.
That’s also largely because of the growth plans it has for the years ahead. It’s the clear front-runner in the UK. As such, it’s now turning to overseas. Last year saw it add over 500,000 square feet of lettable area across 13 sites, including in The Netherlands and Spain. Notably, it also entered the German market through a joint venture with Carlyle.
That’s exactly the sort of ambition I want to see from the companies I own. That, alongside its cheap valuation and passive income, is why I view Safestore as a steal.
The post I’d buy this neglected FTSE 250 stock hand over fist appeared first on The Motley Fool UK.
Like buying £1 for 51p
This seems ridiculous, but we almost never see shares looking this cheap. Yet this recent ‘Best Buy Now’ has a price/book ratio of 0.51. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 51p they invest!
Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.
What’s more, it currently boasts a stellar dividend yield of around 8.5%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?
See the full investment case
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More reading
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Charlie Keough has positions in Safestore Plc. The Motley Fool UK has recommended Safestore Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
