Public Storage (PSA)

gotcho (84.01) Submitted: 6/28/07 10:06 AM : Start Price: $77.41 PSA Score: -50.78

I did my Masters thesis on this company and boy is their stock price going to plummet.





The good side: This company is a cash cow and is the largest player in the market. However, it only has 10% of the market. About 80% of the remaining market is very fragmented with "mom and pops".





Additionally, PSA has moved in operation from Cali to Maryland. By REIT laws, this move will enable them to issue more perfered and common stock(double than current capacity) and be able to self-underwrite themselves. This will enable growth through acquisitions. Currently, they are 75% of common stock issued. This move will encourage them to issue more to pay for acquisitions, thus diluting the stock base.





The bad side: Analysts have long said this market is saturated and consolidation is around the corner. They were stating this in the '80's as today. But arcording to the market research, the industry is at 90% capacity with very few "sweet" spots left to build. PSA is the closest to finally come through on these predictions. With construction prices soaring, growth must come through acquisitions. But there aren't any large "Shurguards" left out there they can devour. They must buy "mom and pops" for growth. Thus, growth will be a long arduous process.

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