Extra Space Storage is breaking out of a new base as this top REIT stock and member of the IBD 50 cashes in on strong earnings growth.
The Salt Lake City-based real estate investment trust owns, operates and develops self-storage facilities. It runs more than 2,000 locations in 41 states, Washington D.C. and Puerto Rico.
Funds from operations — REITs' version of earnings — have risen an average 34.5% the past three quarters and analysts expect FFO to rise 21% in the first quarter of this year, according to IBD Stock Checkup. FFO has risen an average 22% the past three years and is seen growing 11% this year. Q1 results are due May 3.
Extra Space's earnings prowess has earned it an Earnings Per Share Rating of 90, helping to put it among the top REIT stocks.
The stock's fundamental and technical ratings have landed it at a high No. 2 ranking in its property REIT industry group. It's a standout among REITs as the group itself sits at No. 42 out of IBD's 197 industry groups ranked by stock price performance. The group has climbed from No. 65 three weeks ago.
Top REIT Stock Action
EXR stock is breaking out of a cup-with-handle base, according to MarketSmith chart analysis. The base started on Dec. 31, when the stock's prior uptrend peaked at 228.84. After pulling back to a low of 175.26 on Feb. 24, the stock announced the start of a new uptrend with a huge price reversal on big volume.
From there, Extra Space worked higher until it eased back to form a handle. The high of the handle is 211.05, which set the buy point 10 cents higher, at 211.15. The stock broke out above that entry on above-average volume on Wednesday and remained above that level on Thursday. The buy zone goes up to 5% above the buy point, or 221.71.
One flaw in the base of this top REIT stock is that much of it was formed below the stock's 50-day moving average. But on the plus side, Extra Space's relative strength line is hitting new highs as the stock breaks out of its basing formation.
The company attributes its strong recent growth to a surge in demand in the industry and the company's fleet-footed adoption of methods to bring customers on board quickly. Those methods include the introduction of contactless contracts during the Covid-19 pandemic.
Commenting on results for the fourth-quarter and 2021, Extra Space CEO Joe Margolis said, "We had exceptional performance with all-time high occupancy and strong pricing power."
"We expect solid storage fundamentals again in 2022," he added, "with anticipated same-store revenue growth of 11.5% and core FFO growth of 13.2% at the midpoints, despite very challenging 2021 comparables."
By the end of 2021, about 40% of Extra Space's monthly rentals were through channels that didn't exist 18 months before, Margolis said. "These innovations are expected to reduce operating expenses and to improve the customer experience," he added.
