Extra Space Storage: your attic away from home

From time to time, many of us discover that we have accumulated more stuff than we can store. Should parting with assorted treasures not be an option, there is a firm in Salt Lake City that has the answer.

Extra Space Storage (NYSE:EXR) is a fully integrated, self-administered and self-managed real estate investment trust that owns or operates 641 self-storage properties in 32 states and Washington, D.C. The company's properties consist of more than 430,000 units and 46 million square feet, rented by over 300,000 individual tenants. In addition to on-site management and storage supplies, many of the firm's storage facilities feature monitored video surveillance and alarm-equipped units. Extra Space Storage is the second largest operator of self storage in the United States.

The firm pleased investors about a month ago, when it announced Q4 funds from operations of $0.26 per share and revenues of $52.2 million. Analysts had been expecting $0.24 and $48.5 million. Management also guided Q1 FFO to 23-25 cents per share (24 cent consensus) and FY07 FFO to $1.06-$1.12 per share ($1.04 consensus). Merrill Lynch subsequently upgraded the shares from "neutral" to "buy". The news kept the issue cycling through a positive five-week trading channel. The price is currently consolidating near the base of that channel, where oversold Momentum, CCI, Stochastic and MACD technical parameters suggest the potential for a rise back toward the top. The approximate correspondence of the stock's 50-day moving average to the base of the channel backs the rebound notion.

Altogether, brokers now recommend the shares with two "strong buys", one "buy" and four "holds". The EXR Price to Book ratio (1.89), Net Income Growth rate ($6.7M vs -$0.2M) and Operating Margin (30.24%) compare favorably with industry, sector and S&P 500 averages.

Institutions own about 94 percent of the outstanding shares. The stock is one of those used to calculate the S&P U.S. REIT Composite. Over the past twelve months, it has traded between $14.40 and $20.55. A stop-loss of $16.50 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.