The National Storage REIT (ASX: NSR) share price has had a turbulent year and is currently trading roughly in line with where it started it.
This is despite the company recently reporting big improvements in trading conditions.
How has National Storage been performing?
National Storage is a leading self-storage operator which has been growing at a solid rate over the last decade thanks to a combination of organic and inorganic growth. The latter is through its growth through acquisition strategy, which has been particularly effective over the last few years.
The good news for investors is that management has persisted with this strategy even during the pandemic. Last month at its annual general meeting, the company advised that it has completed eight acquisitions totalling $139 million in FY 2021. But it may not stop there. Management also revealed that its forward-looking acquisition pipeline remains strong.
And while 2020 has been difficult because of the pandemic, trading conditions have been improving greatly in recent months. In fact, at the meeting, the company revealed that in excess of 60,000 square metres of occupancy has been added since 1 July, which is the equivalent of 12 full centres.
In light of this, management was confident enough to reaffirm its underlying earnings per share guidance of 7.7 cents to 8.3 cents. This compares to underlying earnings per share of 8.3 cents in FY 2020.
Is the National Storage share price in the buy zone?
One broker that is positive on the investment opportunity here is Ord Minnett.
At present, the broker has an accumulate rating and $2.05 price target on its shares. It is also forecasting an 8 cents per share distribution in FY 2021.
Based on the current National Storage share price of $1.86, this implies potential upside of 10.2% over the next 12 months.
This potential return stretches to 14.5% if you include Ord Minnett’s dividend estimate, which equates to a 4.3% yield.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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