Iron Mountain A Stronghold In This Market?
A defensive play with a growth kicker is never something to be ignored.
To the people who you met and it's your first cigarette...."
- Sugar Mountain (Neil Young)
I'm a huge Neil Young fan. As a matter of fact, for those of you out there that own Rust Never Sleeps, I suggest you (at some point today) go put it on and just crank Powderfinger. You can say whatever you want about the guy's politics, but at the end of the day Neil Young is easily in my personal top ten of singer/songwriters. I heard Sugar Mountain on the way home last night and it got me thinking about another trading idea.
Iron Mountain (IRM), according to its website, "is the global leader for information protection and storage services." Not exactly the sexiest business out there, mind you, but one you can prosper from nonetheless. In an age where proper storage of books and records has become the norm instead of the exception, Iron Mountain is the end winner. Historically, the storage business is non-cyclical with a diversified and stable customer base. Growth tends to be organic as the growth of existing customers tends to lead to growth for Iron Mountain. All these characteristics make IRM a defensive play with a growth "kicker."
But Iron Mountain is not just sitting back and resting on its "organic growth" laurels.
From a joint venture to enter in the Greek market with its acquisition of a minority interest in SafeDoc, to its acquisition of Accutrac Software in June, to its most recent deal for RMS Services, IRM has remained busy on the "growth by acquisition" front as well.
There is another side to this coin. At 47 times trailing and 36 times forward earnings it is difficult to make a case for IRM on a valuation basis. IRM has also seen a nice move in the stock price, trading from a low of around $26 in July to the current levels of $32.50. However, on further examination one will see what an incredibly consistent story IRM has been. A $3 stock in 1996, the stock has rallied with only a few hiccups along the way. Along this journey IRM also caught the eye of Warren Buffett, who disclosed a position of 9.05 mln shares on his 13F filing back on May 15.
Iron Mountain is due to report its 3Q earnings tomorrow morning before the bell. The "Street" is looking for $0.18 EPS on $687.23 mln in revenues. A lot of good news appears to be in the stock already. I think the play here is to hope for a miss and a retreat in the share price down to $30 or so. If IRM beats, I think the run since July is too great to chase and I would let this one go for now: I am content to keep it on my radar screen. Either way, though, Iron Mountain deserves a good look. A defensive play with a growth kicker is never something to be ignored!
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