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BMO Capital Markets REIT Analyst Paul Adornato explains why Hurricane Sandy could potentially boost storage companies’ bottom lines.
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-- nerve -- around here but everybody is behaving well so far.
There are some sectors that are behaving pretty well they're getting a great boost from recovery efforts in the wake of sandy.
Paul I don't -- he's the senior analyst at BMO capital joining me down a Fox Business exclusive.
You -- you came here to pick out the one sector that I hadn't thought about a lot of people haven't thought about.
And that is storage.
Storage and storage reits talk about this and why you believe it'll really get a pump up.
Our -- so as we just saw there are a lot of individuals who have to clean up there are either their homes or their businesses.
And self storage space is offer a place for them to store their goods while they clean up.
-- they clean up while they actually have to rebuild them and a lot of these names are publicly traded correct right there afford publicly traded games out there.
And we think that all of them will experience.
An uptick.
As a result of those severe storm.
And by the way they've done.
Usually well over the past year it has nothing at least up until five days ago to do with the storm but for example sovereign SO VR AM sovereign self storage.
Up already 46% over the past -- so what do you expect from this company and how does that work.
Not sure so.
We expect.
-- continued strong operating results from the self storage breeds primarily because there's very little new construction.
Of in new storage facilities so this will help all of the operators in the space including sovereign.
Sovereign has had a really really good run they've had some.
Management promotions they are so.
Perhaps it's a little bit of a special story.
-- SA public storage I see a lot of those around and they have already been up about 13%.
Right what's the difference between them and -- would you pick one over the other.
Sure certainly would pick one over the others PS Shea is by far the largest storage operator.
We actually just upgraded the stock today from underperform to market perform.
Because the stock did underperformed this year relative to the rest of the sector.
So we think that the valuation has corrected but we see kind of you know average returns for public storage PSA from here.
And the winner at least over the past year -- -- storage space up 62%.
And because of this you expect an even bigger jump on top of that sort of more whipped cream on top of the case.
You know so extra space -- like the rest of the industry are gonna experience the same pop.
However we have an underperform rating on this stock right now primarily because -- valuation as you noted the stock has already gone out but quite a lot this year so we think.
A little bit of caution is warranted for for that net net.
To support -- point out this is.
Without the -- and those one year charts show that even without a hurricane they can do really good business.
Great it's just been a very very good period for them coming out of the recession.
Consumers have come back.
You know there was a lot of fear that people wouldn't.
You know we have less stuff in their lives and that just has not turned out to be the case.
Paul -- Renato BMO capital markets senior editor thank you so much for joining us -- that was wondered if you could get one of those little storage spaces with a little lamb and mini fridge.
Got it.
