Image Alt

The Investing Box

  /  Editor's Pick   /  Could this storage business be a great growth stock to buy?

Could this storage business be a great growth stock to buy?

Shot of an young Indian businesswoman sitting alone in the office at night and using a digital tablet

A core part of my investment strategy is to look for stocks that could grow and provide me consistent and lucrative returns in the long term. One growth stock I have my eye on is Safestore (LSE:SAFE). Should I buy or avoid the shares?

Self-storage and warehousing

Safestore is a self-storage business that provides units to consumers and companies for warehousing purposes. In fact, it is the largest operator of its kind in the UK, and has an international presence with sites in France, the Netherlands, and Spain.

At current levels, Safestore shares are trading for 919p. They are down 14% over a 12-month period as they were trading for 1,078p at this time last year.

Due to the explosion of e-commerce, which requires lots of warehousing space, as well as a burgeoning housing market, storage and warehousing businesses have done well in recent times. This trend is expected to continue, according to, which is why I am considering Safestore as a major player and a potential growth stock.

Challenges ahead

One challenge that could have a detrimental impact on Safestore shares is the saturated market it operates in. Lots of firms are vying to leverage heightened demand for storage solutions into profit and growth. Furthermore, there are low barriers of entry into the storage market which could invite other players that may be able to eventually undercut and overtake Safestore and others.

I also noticed that Safestore experienced a lot of success in recent years due to the pandemic, as well as the growing housing market. This led to increased demand. The current economic outlook and the cost-of-living crisis could result in weaker demand in the shorter term. This could hurt investor sentiment, not to mention performance and returns.

The bull case and my verdict

So let’s take a look at some positive aspects of Safestore shares. I’ll start with its performance track record. I am aware that past performance is not a guarantee of the future. However, looking back, I can see that it has grown revenue and gross profit for the past four years in a row. With demand for storage space set to continue growing, it could continue this trend too.

Next, Safestore shares would boost my passive income stream through dividend payments. The current dividend yield on offer is 2.7%. This is higher than the FTSE 250 average of 1.9%. I am aware that dividends can be cancelled at any time, however.

Finally, the shares look dirt-cheap right now on a price-to-earnings of just over four. This tells me that if performance and returns were to increase, the share price could follow suit.

In conclusion, favourable market conditions, the belief that demand for self-storage is only set to increase, as well as the passive income opportunity help me make my decision. I would be willing to buy Safestore shares for my holdings.

The post Could this storage business be a great growth stock to buy? appeared first on The Motley Fool UK.

5 stocks for trying to build wealth after 50

Markets around the world are reeling from the current situation in Ukraine… and with so many great companies trading at what look to be ‘discount-bin“ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. We believe these stocks could be a great fit for any well-diversified portfolio with the goal of building wealth in your 50’s.

Claim your free copy now

setButtonColorDefaults(“#5FA85D”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43A24A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#FFFFFF”, ‘color’, ‘#FFFFFF’);

More reading

Jabran Khan has no position in any of the shares mentioned. The Motley Fool UK has recommended Safestore Holdings. 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.