Iron Mountain (NYSE:IRM)
Iron Mountain Inc is a US-based enterprise information storage/management services company. Through its physical storage business, Iron Mountain services a massive 95% of the Fortune 1000, meaning it’s got no shortage of high-value clients. Recently, it has also begun ramping up its efforts to get into the data center sector, a move that feels natural considering the company’s traditional storage operations. With investors looking toward low-risk, stable stocks, it’s no surprise that Iron Mountain has had a huge 63.64% increase in mentions over the past day. The storage titan’s share price is currently hovering around $51, down around 0.5% YTD.
Is Iron Mountain a Good Investment - Positives
There aren't a whole lot of stocks that still look healthy following this year’s massive volatility. However, Iron Mountain has managed to remain strong. Here are a few reasons why it might be the perfect time to add the information storage company to your portfolio.
Over the past three years, Iron Mountain has provided investors with a massive 106% in total returns. Even now, Iron Mountain is only down a minor 0.5% YTD, even the S&P’s dropped 17% over the same period, showing just how well the storage company has been performing relative to everyone else.
Dividends always make a nice addition to any investment. Iron Mountain currently offers a 4.8% yield. This equates to a payout ratio of around 65%, meaning Iron Mountain still has a little bit of room to increase its dividends before things start getting dicey.
Since it was founded in 1951, Iron Mountain has had a huge portfolio of more than 1,400 storage facilities that service over 225,000 customers all around the world.
While Iron Mountain is known for its physical storage solutions, it’s now making a clear effort to incorporate data storage into its model. Considering the whole world is going digital, this seems like a smart move. Currently, Iron Mountain operates 20 data storage facilities which make up around 8% of the company’s business. As we move forward and Iron Mountain continues to expand, we’ll likely see this figure increase well into double digits.
Debt is used to fuel acquisitions and luckily for Iron Mountain, it’s been doing well to keep its debt ratios in line with what you’d expect from a REIT; 5 times earnings before interest, taxes, depreciation, and amortization (EBITDA).
Is Iron Mountain a Good Investment - Negatives
Before pulling the trigger on an investment, it’s imperative you consider the negatives. Here are a couple of reasons to avoid picking up any shares of Iron Mountain.
As storage technology is improving quickly, more companies and individuals are using technological solutions to store their information. This means that Iron Mountain's core physical storage business is becoming somewhat outdated. Therefore, if it wants to continue enjoying success, it’ll likely have to ramp up its data center segment rather quickly.
While Iron Mountain’s efforts to get into the data center market are needed if it wants to remain competitive during this technological age, they’re extremely expensive. Because of this, Iron Mountain has been taking on rather a lot of debt. While its debt is currently in-line with what you’d expect from a REIT, it wouldn’t take much to push it over the edge. Additionally, considering the company’s dividend takes up 65% of its free cash flow, if business slowed, Iron Mountain’s debt could quickly grow to be unmanageable.
Hype Asset of the Day - Conclusion
Overall, Iron Mountain has stood the test of time and boasts some extremely high-value clients as a result. Its main physical storage segment is high-margin and unlikely to slow until data storage regulations are changed, meaning it's a fairly secure business model. While Iron Mountain’s debt is getting a bit out of hand, this is solely due to expansion and therefore can be expected. If you’re looking for a consistent, low-risk company to invest in, you’ll be hard-pressed to find a better contender than Iron Mountain. If you’d like to receive more trending stocks direct to your inbox, check out our premium plans. Alternatively, if you want to learn more about the services offered by HypeIndex, check out our FAQ page.
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