Public Storage a Quality REIT

Despite a weakening economy, we are keeping our Buy rating on Public Storage, Inc. (PSA - Analyst Report). Operationally, the owner of self-storage facilities continues to perform relatively well, and we expect moderate same-store sales growth to continue throughout the year. The company has a strong balance sheet and plenty of cash to be active in acquisitions and developments going forward.

The company is a dominant player in its sector, and with a large diversified portfolio spread across the U.S. and parts of Europe, we think PSA will fare better than smaller competitors as the world economy weakens. We expect the company to ramp up development in a competitive acquisition environment. Despite recent share price increase, the company is still attractive relative to its underlying net asset value and long-term growth prospects.

Currently the company trades at 17.1x our 2008 funds-from-operations (FFO) estimates, a 6 percent premium to office, and an 18 percent premium to self-storage REITs in our coverage universe. PSA has very low debt levels, produces plenty of free cash flow from operations, and has ample cash to be active in the acquisitions and development market.

Read the full analyst report on PSA