A Peek Into Public Storage Success Story
Public Storage, a leader in the US self-storage sector with a massive market capitalization of $50 billion, soared high during the pandemic years. Owing to a surge in consumerism and excess printed money, its revenue witnessed a remarkable 17% and 22.4% increase in 2021 and 2022, respectively. Consequently, the stock price saw a meteoric rise to surpass $421 per share by April 2022.
From Highs to Lows: Market Volatility Strikes
However, the euphoric rally could not hold for long, as sales growth returned to normal levels. By the end of October 2023, the stock price plummeted nearly 45% to hover around $233. This decline caught the attention of savvy investors seeking bargains, ultimately supporting its recovery back to over $291.
An Analytical Perspective: Is Public Storage Truly Undervalued?
Despite the tempting price, a critical analysis suggests otherwise. Trading at 17 times its 2024 Funds From Operations estimates, the stock might be on the pricey end. Particularly for a mid-single-digit growth company with increasing sensitivity to interest rates and declining occupancy rates. The Elliott Wave chart further underlines this viewpoint, revealing potential concerns.
Unpacking the Elliott Wave Analysis
Delving into the historical context, over the span of 32 years from 1990 to 2022, Public Storage stock embarked on a remarkable journey from single-digit figures to over $420 per share. The Elliott Wave theory highlights definitive five-wave patterns, notably marked by I-II-III-IV-V sequences. Each wave coincided with significant market events such as the 2008 Financial Crisis and the Covid-19 pandemic.
Evaluating Market Correction and Future Trajectory
Current observations indicate that the recent surge to $421.76 could represent the final wave of the pattern, implying an impending correction phase. A detailed analysis suggests the possibility of forthcoming corrective waves B up and C down before a resumption of the prior uptrend. If historical patterns hold, this correction could drive the stock price towards sub-$200 levels, a concerning prospect for investors.
Source: Previous Data Used for Financial Analysis