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Safety in numbers
With almost 200 nationwide locations as well as 27 more in Paris, Safestore (LSE: SAFE) is the UK’s largest provider of self-storage.
The company, which puts its sites “close to where people live,” has a diverse range of customers including those moving home, students living away from their families, new parents who need more space for the baby, as well as internet entrepreneurs and more.
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Management has been successful in capitalising on the growth of self-storage for households and businesses and has consistently produced consensus-beating results.
Over the years, SAFE has mostly grown organically rather than pursuing acquisitions. Its priority is to convert enquiries from potential clients into paying customers. The average occupancy is eight months.
On 8 January, the company released the results for the year to 31 October 2018 and said increasing storage prices did not deter customers from renting as its occupancy increased by 2.2%. Importantly, its revenue grew by a much bigger 10.8%.
Earlier in March, the share price reached an all-time high of 620.5p, which means there might be some profit-taking in the stock in the short-term.
However, I expect the societal trends to continue to support the self-storage industry as we are becoming a nation of hoarders and storers. Strongly-performing stocks tend to keep on winning so I would regard any dip in the price as a chance to buy into the shares. And anyone who buys can also enjoy dividend income, which now stands at a yield of 2.8%.
Jobs growth overseas
PageGroup (LSE: PAGE), the global recruiter, operates in four core segments “across 25 disciplines from actuarial to technology.”
Its business spans four regions, namely the UK, Europe-Middle East-Africa (EMEA), Asia-Pacific, and the Americas. The recruiter now focuses especially on growth countries where recruitments markets are less developed and hence competition is limited.
Since the 1970s, the company has mostly achieved organic growth, by discipline and increasingly by geographic region. In many of the nascent markets, there are few acquisition opportunities and the company, like its competitors, has to grow organically.
On 14 January, its year-end trading update showed a company that is performing well in most regions. Gross profit went up by 15.4%. 2018 was a record year when 20 countries grew by over 20%, a number cheered by investors. The high-growth regions and countries included the US, Germany, Latin America, Greater China and South East Asia.
The recruitment industry is quite sensitive to macroeconomic conditions and is thus cyclical. 2.1% growth in the UK was the lowest among the regions but, despite the uncertainty over Brexit, it was still encouraging to see that nationwide jobs have been resilient. Since 2016, PageGroup has also benefitted from the weak pound that followed the Brexit referendum result.
Analysts are now forecasting that 2019 earnings will rise by double-digit percentages. The group operates a cash-generative business with a net cash position of £96m at the end of December. The shares have a dividend yield of 2.9%.
Despite the impressive numbers, investors have not immediately hit the buy button in 2019 so far, as there is concern about a potential slowdown in China, which could later trickle down to other economies, too. Nonetheless, I believe in PageGroup’s fundamental story and would be a buyer of the share at these levels.
