November 28, 2023

Our writer thinks a long-term trend could boost one sector. That is why he would happily own two FTSE 250 companies that both specialise in it.
Image source: Getty Images
The FTSE 250 index of companies includes a lot of businesses that are still firmly in growth mode. I have been thinking about what potential growth areas I want to target in my portfolio.
I have identified one I think might see sales increasing for many years or even decades to come — and two shares I could own in my portfolio to get exposure to that long-term opportunity.
The trend in question is the growth of self-storage. This has long been a big business in the US. Historically people there often moved around to follow work opportunities, while storing some of their belongings temporarily.
The drivers for the growth in the UK are not quite the same, although labour mobility does play a role. I also think a tight housing market, which means space is at a premium, will lead more and more people to store belongings away from home. On top of that, a move to mixed working could mean that some businesses downsize their premises – but still need somewhere to store merchandise.
All of that bodes well for demand in the self-storage industry.
From a commercial perspective, I think the industry can be rewarding for investors.
It is a pretty simple model – a company can hire or buy a large space then sublet little bits of it at a higher rate. As many customers only need to access their unit occasionally, if at all, self-storage buildings do not need to be in expensive, prime locations.
As the saying “out of sight, out of mind” suggests, many people put things into storage on a short-term basis and then no longer think about them as much as when they were clogging up the house. That can lead to customers leaving items in storage for years at a time, paying rent all the while.
In fact, one of the few things I do not like about the model is precisely how straightforward it is. That means that barriers to entry are fairly low, beyond the initial outlay of buying or renting a building. That could hurt profitability.
That is one reason I own one FTSE 250 self-storage company in my portfolio — Safestore — and would consider adding its rival, Big Yellow.
Both have invested in building a distinctive brand that can drive customer preference for them over rivals. That can create loyalty and help them maintain pricing power. If the market becomes more competitive and rivals cut pricing, that might help those two firms maintain their profit margins. Then again, it might not — and they also face other risks, such as rising property prices that make it costlier for them to operate.
But why would I consider buying both of these FTSE 250 firms in the same line of business rather than just one?
I reckon both are well-run and benefit from strong brands. They have large networks of sites that can also help differentiate them from smaller local companies. Both also pay dividends.
I invest for the long term. I see this pair of businesses as potential long-term winners from what I expect to be continued growth in demand for self-storage facilities. For that reason, I would be happy to own both shares in my portfolio.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be considered so you should consider taking independent financial advice.
C Ruane has positions in Safestore Holdings. The Motley Fool UK has recommended Safestore Holdings. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
| Kevin Godbold
If I’d learnt about these five Warren Buffett tips at the age of 30, I’d likely be a lot richer…
Read more »
| Dr. James Fox
The UK index is pretty volatile right now, but that’s only half the story. Today, I’m looking at two depressed…
Read more »
| Dr. James Fox
These two UK shares are offering huge dividend yields, but are they right for my portfolio? Let’s take a closer…
Read more »
| Dr. James Fox
Passive income is a core objective of my investment strategy. But with areas of the market down, I’m looking at…
Read more »
| Mark Tovey
As NHS waiting lists reach record numbers, I am looking at a FTSE 250 stock that could benefit from the…
Read more »
| Christopher Ruane
Hunting for some extra income, our writer explains how he would consider investing regularly in dividend shares with some spare…
Read more »
| Zaven Boyrazian, MSc
Time may be running out to buy cheap shares in this stock market correction. But what’s the best strategy to…
Read more »
| Zaven Boyrazian, MSc
With a record-breaking performance, this FTSE 100 business is defying all expectations, making it potentially one of the best shares…
Read more »
View All
Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be considered so you should consider taking independent financial advice.
To make the world Smarter, Happier, And Richer
Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show and premium investing services.
Read more about us >

We have taken reasonable steps to ensure that any information provided by The Motley Fool Ltd, is accurate at the time of publishing. Any opinions expressed are the opinions of the authors only. The content provided has not taken into account the particular circumstances of any specific individual or group of individuals and does not constitute personal advice or a personal recommendation. No content should be relied upon as constituting personal advice or a personal recommendation, when making your decisions. If you require any personal advice or recommendations, please speak to an independent qualified financial adviser. No liability is accepted by the author, The Motley Fool Ltd or Richdale Brokers and Financial Services Ltd for any loss or detriment experienced by any individual from any decision, whether consequent to, or in any way related to the content provided by The Motley Fool Ltd; the provision of which is an unregulated activity.
The value of stocks, shares and any dividend income may fall as well as rise and is not guaranteed, so you may get back less than you invested. You should not invest any money you cannot afford to lose, and you should not rely on any dividend income to meet your living expenses. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, administrative costs, withholding taxes and different accounting and reporting standards. They may have other tax implications, and may not provide the same, or any, regulatory protection. Exchange rate charges may adversely affect the value of shares in sterling terms, and you could lose money in sterling even if the stock price rises in the currency of origin. Any performance statistics that do not adjust for exchange rate changes are likely to result in an inaccurate portrayal of real returns for sterling-based investors.
Fool and The Motley Fool are trading names of The Motley Fool Ltd. The Motley Fool Ltd is an appointed representative of Richdale Brokers & Financial Services Ltd who are authorised and regulated by the Financial Conduct Authority (FRN: 422737). In this capacity we are permitted to act as a credit-broker, not a lender, for consumer credit products. We may also publish information, opinion and commentary about consumer credit products, loans, mortgages, insurance, savings and investment products and services, including those of our affiliate partners. We do not provide personal advice and we will not arrange any products on your behalf. Should you require personal advice, you should speak to an independent, qualified financial adviser.
The Motley Fool Ltd. Registered Office: 5 New Street Square, London EC4A 3TW. | Registered in England & Wales. Company No: 3736872. VAT Number: 188035783.
© 1998 – 2022 The Motley Fool. All rights reserved. The Motley Fool, Fool, and the Fool logo are registered trademarks of The Motley Fool Holdings Inc.


About Author

Leave a Reply