Stock market

1 Under-the-Radar FTSE 250 Money This Fool Loves!

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But tucked under some of the bigger, more recognizable names. FTSE 250 The index, if you ask me, is a bit of an overlooked diamond.

I am quoting. Safe Store (LSE: SAFE). I’ve had my eye on the stock for a while, and the share price has fallen to a perfect entry point for me.

Here’s why I like the stock, and why I plan to buy some shares soon.

Self storage

Safestore is the UK’s leading self storage business with an excellent profile, track record, and dominant market position. As well as growing in the UK, it is now the second largest business of its kind in Europe.

Shares are down 19 percent over the 12-month period. At this time last year, they were trading for 939p compared to current levels of 754p.

I am not worried about share prices falling. I think this is due to a difficult macroeconomic picture. The same anxiety has hurt many real estate and property stocks.

Bell case

Let’s be honest, storage isn’t exactly exciting or glamorous. Fortunately, I’m not always looking for excitement from my investments. I look for leading businesses, with juicy returns and potential for future growth. Safestore ticks those boxes for me!

Safestore’s leading position in the UK has helped the firm grow well into a good-looking investment. However, its continued growth excites me, and gives me confidence that it can continue on its upward trajectory.

It’s slowly pulling away from the European market, and I’m sure management is eyeing the number one spot across the continent as well. A recent purchase of a large facility in Germany underscores this for me. The European self-storage market is small, with a lot of potential for growth.

It is worth remembering that the demand for storage space has increased in recent years. This is linked to the e-commerce boom as well as the growing population. Safestore has capitalized, and it looks like it may continue to do so.

Breaking down some basics, I’ll start with his diagnosis. Safe Store’s shares look attractive after a recent decline in its price-to-earnings ratio of 15. Also, the dividend yield of just over 4% is attractive to help me grow my passive income stream. However, I am aware that profits are never guaranteed.

Notable risks

First, high interest rates are a concern. I think this is the main reason why shares have fallen recently. These high rates also put cost-of-living pressure on consumers, as higher prices can force people to give up their storage space to pay for necessities. This may affect the performance level of Safestore. Also, higher rates can also push property prices down.

Another issue for Safestore is its current level of debt on its balance sheet of just over £800m. Let’s be honest, most firms have some sort of debt. However, in some cases, debt can inhibit growth aspirations. In addition, debt repayment may take precedence over rewarding investors. I will keep an eye on it through performance updates from the business.

Overall I am a fan of Safestore as a business and potential investment. Its dominant market position, growth prospects, valuation, and passive income opportunities are hard to ignore.


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