National Storage REIT (NSR) $2.24

UPDATED 12/07/2023 09:10

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NSR is an interest rate-sensitive stock which has been illustrated by its pullback over recent months as bond yields climbed to multi-year highs, the inverse correlation has been amplified over the last few weeks as rates popped on the upside. However, the subsequent sharp pullback by NSR in our opinion is more related to the relative valuation that Abacus (ABP) has spun out Storage King on i.e. ~10% below NTA when NSR was at the time trading above their NTA – a double whammy to the NSR share price from a valuation perspective.

Now that global bonds have reached our targeted zones the picture has changed and as we look for signs of reversion by bonds NSR is becoming more attractive, especially as the ABP news has largely been absorbed by the market as it approaches $2.20 i.e. if we are correct and bonds reverse lower over the coming weeks/months then NSR should start to outperform.

We believe markets were caught positioned for an interest rate pivot sooner rather than later which compounded the relatively sharp pullback by NSR after the ABP news.
We now like NSR into further weakness under $2.20 as the market digests the news over the last month.

NSR

MM is bullish on NSR in H2

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National Storage REIT (NSR) v 3-Year Bond Yield

LAST UPDATED 12/07/2023 08:58

As we look to maintain a degree of flexibility in our portfolios it’s unlikely we will go “all in” to equities at current levels i.e. they aren’t cheap enough at the moment and better opportunities are likely this side of Christmas, especially on the stock/sector front. One of our existing holdings that is approaching our “Sell Zone” is REA Group (REA) where we have discussed +$150 as being an area where the stock will screens fully valued in our opinion i.e. only another 4% higher.