Big Yellow continues to thrive in a world turned upside down

You would be hard-pressed to find a more counter-cyclical business model than self-storage. As the pandemic battered businesses of all stripes, Big Yellow Group’s (BYG) profits and share price soared as displacements, deaths, migration, lifestyle changes and disruptions of all kinds saw people seek self-storage space. By November last year, the situation was looking so frothy that even executive chairman Nicholas Vetch suggested a plateau was coming, as “historically high levels of occupancy” made way for “a more normalised trading environment”.

Then Russia invaded Ukraine and the notion of a “more normalised” anything went out of the window. As the world leaves behind the Covid-19 crisis, it enters a new one, a tangential consequence of which may be that people are once again searching for self-storage space.

All of which explains why – despite the bearish comments of its own chairman late last year – Big Yellow has posted such a strong set of results for the year to 31 March. Operating profit has more than doubled, revenue has leapt 27 per cent and its cash generated from operations has also jumped 38 per cent.

Meanwhile, the company’s shares are now trading at a premium to net asset value of 8.5 per cent. This reflects a much fairer value for the stock than in November 2021 when the company was trading at a 62.5 per cent premium. At the time, we recommended shareholders take their profits and sell. However, given the new earthbound rating, we believe the stock now represents good value for money. Buy

Last IC View: Sell, 1,580p, 23 Nov 2021